Kelowna City Council to consider stricter regulations for short-term rentals

Just days after the province introduced new legislation to crack down on short-term rental (STR) platforms like Airbnb and Vrbo, the City of Kelowna could be following suit.

On Oct. 16, the province said tighter regulations on STRs would create more long-term housing options in BC.

Now, in a report headed to city council on Monday, City of Kelowna staff are recommending amendments to the zoning bylaw that would see STRs banned as a secondary use from all zones, with a few small exceptions.

The recommendation comes three months after city council asked staff to prepare options to create stricter rules for STRs in Kelowna.

In July, council said they wanted to see restrictions like prohibiting STRS from operating in townhouses and apartment land use areas, increasing business license fees and upping fines for non-compliance in an effort to support long-term housing in the city

The staff report points to a 2020 study by the Canada Mortgage and Housing Corporation, which says 31,000 homes have been taken off the long-term market in Canada.

Although that report did not have specific numbers for Kelowna, there are 1,191 STRs in the city which is an increase of 89% since 2020.

“The City of Kelowna’s Housing Needs Assessment has conducted a comprehensive analysis of the community’s housing needs and found that there is a large existing deficit of housing in Kelowna, as well as expected ongoing need for housing into the future. Rental housing is in particular demand, and this demand is expected to grow,” the report says.

“(STRs) are diverting units of housing out of the regular rental market during a housing and affordability crisis.”

Another issue that the city is facing is a lack of capacity to enforce the STR program.

The staff report says that from 2019 to the end of 2022, bylaw received nearly 300 calls related to STRs connected to about 146 properties.

One property received 19 complaints in 2023 and another received 115 calls to bylaw between 2016 and 2020.

The staff report says enforcement challenges lie in bylaw being able to prove principal residency where STRs are permitted as a secondary use and gathering enough evidence to lay a charge.

“To address this, staff have proposed to remove (STR) accommodation as a permitted secondary use from all zones in the city,” the report explains.

“This proposed amendment may result in an initial spike in enforcement requirements due to the number of illegally operating (STRs), but in the long-term these proposed amendments are anticipated to make enforcement of the program easier.”

Bylaw is not the only city department struggling with STR enforcement.

The report says the business licensing department also struggles. There are around 900 non-compliant properties that have yet to obtain a STR business license and “a number” of properties have been flagged for further investigation, the report says.

Ultimately, staff are recommending eliminating STRs from single and multi-family homes and removing them as a permitted secondary use in all zones across the city.

That includes all agricultural and rural, single and two dwelling, multi-dwelling, core area and other zones, and comprehensive development zones.

STRs would be able to continue operating as non-conforming with a valid business license, on properties with recognized exemption status, on properties with approved site-specific regulations and in the McKinley Beach area.

Should council follow the staff recommendation, around 427 STRs would receive non-conforming status and another 693 STRs would be allowed to continue operating as “a permitted principal use.”

However, that is all subject to chance as the city receives more information from the province.

The report says the city recognizes the financial benefit of STRs for homeowners, but they say “an appropriately regulated process is required.”

“The challenge faced by municipalities is to find a balance in regulation of STR activity to continue to enhance benefits and opportunities of the industry, while reducing any detrimental effects on housing and neighbourhood livability,” the report concludes.

Council will be considering this report during the Monday meeting at 1:30 pm.