Burlington's Approach to Managing Short-Term Rental Market Disruptions

The rise of short-term rental platforms such as Airbnb and VRBO has transformed the hospitality environment, opening up economic possibilities for homeowners but equally challenging several housing markets in most cities. Not exempt is Burlington, Ontario. As the popularity of these platforms grows, the number of long-term rental units decreases, thereby increasing the severity of housing shortages and making rentals more expensive.

At Royal York Property Management, we know just how many challenges landlords have in this fast-changing market. Being rated number one in property management for six years running, Royal York Property Management assures property owners of the ability to relax and diversify their portfolios while professionally managing complexities.

Competitive in the Ontario landscape, the property management portfolio is strong and now includes 22,000 properties valued in excess of $10.1 billion in combined assets. This blog explores Burlington's comprehensive approach to managing the disruptions the short-term rental market is causing while balancing the economic benefits against housing stability.

Background 

Short-term rental platforms have made traveling more convenient by providing extra income to house owners. The proliferation of STRs has strained Burlington's housing market, reducing the availability of units for long-term rentals and driving up the cost of housing. The city realized there was a need to deal with the regulation of STRs in a balanced manner to create opportunities and ensure housing stability.

Previous Attempts at Regulation  

Residents, along with short-term renters, expressed outrage at Burlington's first attempts to regulate the industry. The original ordinance, which would have restricted short-term rentals to bedrooms within a host's primary residence, was vetoed by Mayor Miro Weinberger because it was too restrictive. It was a failed first attempt that pointed toward the need for a more integrated approach to the larger implications of short-term rentals on the housing market while not totally trying to stop a practice that brings real economic benefits.

Revised Approach  

In 2024, the ordinance committee under the City Council of Burlington proposed a revised ordinance that provided a balanced solution toward managing STRs. Among the many changes, this new ordinance includes certain key changes that are aimed at supporting the local economy while keeping housing affordable:

Expanded Eligibility   

The revised ordinance will allow STRs in property types such as detached homes, accessory dwelling units, duplexes, or homes with three to four units on the same lot as the host's principal residence. This change recognizes that STRs can coexist with long-term housing choices while offering flexibility to homeowners and keeping housing available for residents.

Host-Occupied Rentals  

Homeowners can now rent their own homes to guests and enjoy a much-needed income stream to pay for mortgages or other expenses. Flexibility is essential for a number of homeowners who would not be able to make ends meet without the extra income from STRs.

Exceptions for Affordable Housing   

Exceptions have been made in this revised ordinance for seasonal homes and units within multi-unit buildings where long-term tenants reside, meaning affordable housing will not be hurt by the rise of STRs. This puts controls on housing affordability while allowing some degree of STR activity.

Regulatory Framework for Short-Term Rentals    

Policy Reform Goals  

Burlington's reform of the STR policy is an attempt to develop a tiered system of regulation for different types of rentals, which should discourage the most egregious uses and protect the city's stock. By limiting the number of housing units converted to STRs, such conversions will contribute to the city's goal of preserving and expanding permanently affordable housing while giving hosts some flexibility to earn income.

Proposed Reform  

The following zoning and housing code reforms have been proposed to achieve this:

1. Clear Standards for STRs: Differentiate between 'bedroom(s) within a unit' and 'whole unit' STRs for zoning, rental registration, and minimum housing code requirements.

2. Zoning Permit and Registration: Require all STR hosts to apply for a zoning permit and register as a rental unit with the Department of Permitting & Inspections, meeting minimum maintenance and fire safety standards consistent with those required by the State of Vermont, and remitting state and local Rooms & Meals taxes.

3. Expanded Bed & Breakfast Standards: Clearly recognize 'bedroom(s) within a unit' STRs, continuing existing standards:

- The property must be the host's primary residence.
- Up to two rented rooms are permitted in residential zones; three or more rented rooms are reviewed under conditional use requirements.
- Shall provide one parking space per rented bedroom in residential districts.

4. New ‘Whole Unit Short-Term Rental’ Use: Considered a non-residential use with applicable standards:

- The host or designee must be a resident of the property/building.
- Permitted use in mixed-use zones; conditional use in residential and institutional zones.
- Limit the total number of whole-unit rentals within a building.
- Require a parking space for each STR unit in all zoning districts.
- Apply housing replacement requirements to any housing units converted to whole-unit STRs.

Enforcement and Taxation

For the successful management of STRs, effective enforcement is of critical importance. Burlington will require all units operating an STR to register with the city for better monitoring and to ensure compliance with safety standards. Impose a tax of 9% on income from rentals of STRs, such as Airbnbs and VRBOs, and allocate the funding to local services and infrastructure.

Community Task Force  

In working out a comprehensive approach, Burlington initiated the “Made in Burlington" bylaw initiative by convening a task force of the community composed of residents, experts in housing, and other stakeholders in the city. The task force will explore options on how to regulate STRs, propose policies that balance economic benefits with housing stability, formulate compliance guidelines, and propose zoning regulations to avoid the concentration of STRs in particular neighborhoods.

Challenges and Future Outlook  

All these efforts notwithstanding, there are challenges in the short-term rental market in Burlington. For hosts, tracking compliance entails diligent monitoring and enforcement. Regular audits and penalty enforcement keep people in line. Effective management of STRs translates to more in the way of enforcement, education, and community engagement; it requires an adequate budget.

The approach undertaken by Burlington in managing its STR market is one of commitment to finding a balance between economic growth and housing stability. By engaging the community and solving issues of affordability, creating sustainable models for STRs that benefit everyone—both residents and visitors—is in sight.

At Royal York Property Management, we support such initiatives and encourage all landlords to remain informed and adaptable as the market continues to evolve. What Burlington is doing is a very encouraging example for other cities in the same situation to ensure that STRs and long-term housing coexist harmoniously. For more information on Royal York Property Management and our services, visit: royalyorkpropertymanagement.ca