A condo can be a great investment opportunity for an individual. There is potential for capital appreciation, as well as cash flow from renting the unit to others, if you understand the rental restrictions in bylaws.
In today’s market, owners are experiencing cash flow either through long-term rentals, or short-term rentals like AirBnB. At the same time, strata corporations and strata managers are becoming more weary of potential annoyances for residents that are caused by short-term rentals. This has resulted in an increase in adopting by-laws that restrict them.
Understanding rental by-laws:
When purchasing a condo as an investment, it is important to understand the rental restrictions contained in the by-laws. Here are a few things to look for:
- First off – check and see if the building allows rentals at all!
- If the building does allow rentals, are there restrictions on the total number of units rented? This can be common in strata corporations, and the limit may be at the max, meaning as a new owner, you would need to go on a wait list to be able to rent your condo.
- Does the building specifically disallow short-term rentals? It is becoming more common for strata corporations to pass by-laws banning short-term rentals under 30 days in length.
Disobeying a short-term rental by-law can come at a hefty fine to the unit owner, as our friends at Tribe Management1 explain below:
One of the most hot-button topics in strata this year has to be short-term rentals, with the City of Vancouver passing legislation in early 2018 that requires an annual license fee for short-term rentals on websites such as AirBnB or Expedia.
Strata corporations have been able to pass by-laws banning short-term rentals completely, with a maximum of a $200 per week fine. But starting November 30th, that fine could go up to $1,000 per day. Paul Mendes, Partner at Lesperance Mendes Law Firm explains.
“Starting from November 30, you can fine owners who contravene strata by-laws on property use including short-term rentals and house exchanges, but you do need to have a by-law passed acknowledging the $1,000 fine in order to begin enforcing it November 30.”
The hope is that the $1,000/day fine will serve as a deterrent for those acting as hotel-style landlords.
How can Eli help?
When looking at buying that condo, be sure to understand all the restrictions relating to rentals. These will be contained in the strata’s by-laws, and subsequent amendment documents to the by-laws – all of which are important.
If you find these documents confusing, talk to your Realtor about getting an Eli Report, which helps shed light on these issues!