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Kelowna wants to better align its short-term rental rules with BC's regulations

City of Kelowna planning staff are recommending amendments to the city’s short-term rental (STR) rules to better align them with the province’s standards.

A review of the city’s STR rules was hinted at by mayor Tom Dyas in an interview with KelownaNow in mid-December.

On Monday, staff with the Development Planning Department will be presenting city councillors with data on STRs as they relate to housing and tourism.

The report notes that tourism and housing markets are complex and it is unclear if the STR restrictions improved housing affordability or impacted tourism.

<who> Photo Credit: KelownaNow file picture

However, staff are still recommending amending the bylaw to increase resources to enforce and monitor STRs in the city.

In recent months, Kelowna’s STR rules have drawn strong criticism from local businesses and the development community as a major reason for a decline in the local economy (see here and here), the staff report says.

City staff say they reviewed the data, however, they found the “fluctuations in the local economy are the result of several factors” and cannot be blamed entirely on the STR rules, which were adopted last January, a few months before the province's rules went into effect.

As of December 2024, there were 427 approved STR business licences operating as a secondary use, down from the 1,217 listed in 2023.

The report says that number surged to 2,910 listings in the peak of summer, something staff say shows “a sufficient supply of STRs to meet tourism demand in the summer of 2024, however, demand appears to have been down.”

The report says the Okanagan’s heat, the January cold snap that negatively impacted wine and fruit crops, wildfires, smoke, increases in cost of travel and airline strikes contributed to a drop in tourism.

Generally, the goal of the STR rules was to increase the amount of housing in the market and initial findings show some positive results.

<who> Photo Credit: City of Kelowna file picture

Staff say early indications show rents are levelling out or decreasing and a reduction in policy rates is “leading to more optimism in the building sector.”

“Canada Mortgage and Housing Corporation reported in December 2024 that Kelowna’s vacancy rate went from 1.3 % in 2023 up to 3.8 % in 2024. This is a level not seen in 20 years,” the report says.

Staff list a few reasons why the city should align their stricter rules with the province’s, which includes being eligible for a federal grant and being more consistent with BC’s Compliance and Enforcement Unit.

That grant could fund a new enforcement team for up to three years, the report says.

“Easing the secondary use restrictions on STRs in Kelowna would remove some of the perceived negative impact of these restrictions on the local economy,” city staff say.

“Additionally, this revision should reduce confusion about STRs in Kelowna in relation to other surrounding municipalities and support a more positive narrative regarding tourism and accommodation choice in Kelowna.”

According to the report, Kelowna’s vacancy rates are trending upward and many new purpose-built rentals are coming online, so adjusting the STR rules makes sense.

Under the province's regulations, communities with a population of 10,000 or more with a principal residence requirement and a vacancy rate above 3% for two consecutive years can request to opt out of the requirement that states STRs are only allowed in the licencees’ principal home.

“This is likely to be an option available to the City of Kelowna in 2026, based on the trajectory of Kelowna’s rental vacancy rate,” the report also mentions.

Staff will be seeking direction to draft bylaws to align local regulations with provincial standards and bring them back at a future meeting.



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