At it’s meeting on August 13th, the municipal Council of Prince Edward County approved Airbnb licensing with annual fees, regular inspections and significant penalties for infractions. On November 4th, the municipality will start taking license applications online for short-term rentals that were in operation prior to October 8th, 2018. Licensing for more recently established Airbinb’s will begin in the new year. In this article I highlight some of the key parts of the licensing system.
Last October, County Council approved the initial measures needed to regulate Airbnb’s (or more strictly speaking, short term accommodations). However, no further action could be taken until the County approved Airbnb licensing procedures and the details of the new system.
All short-term rentals (under 30 days) in the County will require a license to operate. The system has real teeth: fines for operating without a license run to thousands of dollars for repeat offenders.
Who Will Be Eligible For A License
Properties -not owners- will be licensed. The County will use several rules to determine if a property is eligible to apply for a license:
- A legal residence that was used as a short-term rental before October 2018 will be “grandfathered” and automatically eligible.
- New Airbnb’s will be subject to a 15% rule. This means that no more than 15% of the homes in an area can be used for short-term rentals.
- Properties with a permanent resident will be exempt from the 15% rule. They will be eligible to apply for a license even if there are already a lot of short-term rentals in the area.
Just because a property is eligible to apply for a license doesn’t mean it will automatically get one.
To actually get a license, a property will have to meet several criteria established by the County. These include adequate insurance, building code compliance, fire safety compliance, adequate on-site parking, adequate space for guests to assemble outside, etc.
Before getting a license, properties must pass an inspection to determine if they meet the criteria. “Whole home” rentals need an inspection every 2 years. On the other hand, “primary residence” type rentals will need an inspection every 4 years.
Primary Residence vs. Whole House
The licensing system divides short-term rentals into two types: primary residence and whole house
A “primary residence” occurs where there is a second unit on a property which is also the primary residence for someone. The permanent resident can be the owner or a long-term tenant.
“Whole house” rentals occur where the whole house is used as a short-term rental. (In other words, there is no one on site who makes their primary residence there.)
In addition to receiving different treatments for the 15% rule, these two types of rentals will also pay different license fees.
The license fee for a short-term rental will depend on three things:
- the type of short-term rental (primary residence or whole home)
- the number of rooms and
- whether it is an inspection year or not.
Inspections will be every 4 years for “primary residence” short-term accommodations and every 2 years for “whole house” rentals. License fees will be lower during the non-inspection years, reflecting the County’s lower cost.
The following table summarizes the license fees for this year:
When does licensing start?
The County hopes to start taking applications for licenses late this summer or early this fall. However, when Prince Edward County approved a system for licensing Airbnb’s, there was no administration in place. As a result, there will be a grace period with no enforcement until December 31, 2019.
If you are buying a property which will be used some or all of the time as a short-term rental, it is essential to determine whether the home can get a license before making an offer.
For more information on the impacts of short-term rental licensing or any other aspect of real estate in Prince Edward County, please contact me at 613-03-0027 or firstname.lastname@example.org