Canadian cities are shutting down the short-term rental market. The era of buying a condo purely to rent on Airbnb is ending fast. Cities like Toronto, Vancouver, and Montreal are now strictly limiting short-term rentals to primary residences only. The goal is to return housing to long-term residents. With an estimated 235,000 homes currently acting as tourist stays, the pressure is on. The federal government has even backed this push with a $50 million enforcement fund to help cities crack down on illegal operators.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
This is not a minor adjustment. The rules are complex, vary by city, and carry heavy fines. For anyone considering buying property for short-term rental use, the landscape has changed permanently. Here’s what you actually need to know.
The most important concept to understand right now is the Principal Residence Requirement. This is the rule that determines whether you can legally operate a short-term rental.
What I look at first when assessing a property for STR use is whether it can even qualify as a principal residence. If it can’t, the rules in most major cities simply don’t allow it.
For a deeper look at how these policies fit into the broader Canadian market, check out our analysis of how government policies are shaping the future of real estate in Canada.
The Real Cost of Operating a Short-Term Rental in Canada
The costs associated with running an STR are climbing. It’s not just the registration fee. You have to factor in license fees, municipal accommodation taxes, and the lost income from night caps. Then there’s the risk of fines if you slip up.
In Toronto, a landlord pays around $390 per year to register, plus an 8.5% Municipal Accommodation Tax (MAT) on every booking. In Vancouver, the license is cheaper at $100, but you can only rent your entire home for 180 nights a year. The table below breaks down the direct costs in four major cities.
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| City | Registration Fee | Night Cap | Max Fine (Individual) |
|---|---|---|---|
| Toronto | ~$390/year | 28 days (whole unit) | $10,000 |
| Vancouver | ~$100/year | 180 nights | $50,000 (Provincial) |
| Calgary | $172 (Primary) / $510 (Non-Primary) | N/A | Varies |
| Montreal | CITQ + Municipal | 31 days or less | $25,000 |
Navigating the legal side of this is tricky. Many landlords turn to professional advice to understand their obligations. If you need to clarify the rules for your specific situation, using a service like JustAnswer Canada Lawyers can help you connect with a real estate lawyer without a full retainer.
Common Mistakes Landlords and Investors Make
The rules are new, and they change fast. Here are the most common errors I see people making with short-term rentals right now.
Assuming City Rules Are the Only Rules
This is the biggest trap. A property in Toronto might be zoned residential and the city might allow STRs. But if the building’s strata council has passed a bylaw banning short-term stays, the city registration doesn’t override that. The same applies in Vancouver and Montreal. You must clear all three layers: municipal, provincial, and strata. Relying on just one can leave you with a non-compliant property.
Ignoring the Principal Residence Rule
Many investors try to buy a second property strictly for Airbnb use. In most major Canadian cities, this is now illegal. Vancouver requires you to live in the home for 180 days a year. Toronto requires it to be your primary address. If you’re buying a property purely as an investment STR, you need to check the local rules carefully. The CBA’s analysis of STR regulations confirms that this restriction is specifically designed to stop investors from pulling homes off the long-term market.
Trying to Operate Without a License
Some hosts think they can fly under the radar. Cities are now using technology to find them. Burnaby uses advanced software to scan websites for unregistered properties. London, Ontario uses AI to identify non-compliant listings. The chance of getting caught is high, and the fines are becoming severe. In Ottawa, fines under the Ontario Municipal Act can reach $100,000 for individuals and $500,000 for corporations. It’s a risk that’s no longer worth taking.
This tightening of rules is a major shift. For more on the broader forces at play, read our article on the truth about foreign investors and their impact on Canadian real estate.
How the New Short-Term Rental Rules Actually Work in Practice
If you want to operate a legal short-term rental in Canada today, you need to follow a specific process. Here is the practical breakdown of how to do it in most major cities.
Verifying Your Property Eligibility
Before you list anything, confirm the property is your principal residence. In Vancouver, you must prove you live there at least 180 days a year. In Toronto, it must be your official address for billing and tax. Next, check the zoning. Some cities, like Montreal, have specific boroughs where commercial tourist accommodations are allowed. You also need to check your strata or condo bylaws. If the building has a rule against short-term stays, the city permit won’t save you. Walk through the property, confirm the address, and check all three layers: municipal, provincial, and strata.
The Registration and Licensing Process
Once eligibility is confirmed, you need to register. This is not a single step. In Toronto, you apply for a Short-Term Rental Operator Registration with the city, which costs ~$390 per year. In Vancouver, you need a business license (~$100 per year). In BC, you also need a provincial registration number from the Short-Term Rental Accommodations Act registry. In Quebec, you need a CITQ classification certificate from the provincial tourism regulator. Each step requires submitting documents, paying fees, and waiting for approval. The process takes weeks, not days.
Tax and Fee Compliance
Running an STR means you are a tax collector. In Toronto, you must collect and remit the 8.5% Municipal Accommodation Tax (MAT) on every booking. Airbnbs in Montreal automatically collect the 3.5% lodging tax plus QST. You must also report this income on your taxes. Failing to remit these taxes can lead to audits and penalties. It’s a good idea to keep a separate ledger for your STR income and taxes. Using a eufy S330 Smart Lock can help you manage guest access securely and track entries, which is useful for compliance records.
Future of STR Rules: What’s Coming Next
The rules are only getting tighter. The federal $50 million enforcement fund is helping cities hire more inspectors and build better technology. More municipalities are opting out of provincial exemptions. For example, Kelowna opted out of the BC framework for tourism-zoned buildings, but the overall trend is toward stricter regulation. The BC government has signaled that the principal residence rule is here to stay. Landlords should expect more enforcement, not less. The era of the full-time, non-owner-occupied Airbnb in a residential area is effectively over.
For a broader perspective on how these changes fit into the economy, see our piece on how interest rate hikes are changing the housing market in Canada.
Frequently Asked Questions About Short-Term Rental Bans
Can I run an STR in a cottage I only visit in summer? ▾
How do cities find illegal STRs? ▾
What’s the difference between a B&B and an STR in these rules? ▾
If I register with the city, am I 100% legal? ▾
Do these rules apply to my basement apartment? ▾
The Window for Full-Time STRs Has Closed
The short-term rental market in Canada is contracting. The rules are too dense, the fines too high, and the enforcement too sophisticated to treat it as a passive income stream. The principal residence requirement is the new standard, and it removes the financial incentive for buying investment properties solely for Airbnb use. Investors need to pivot. That might mean converting to long-term rentals, selling, or focusing on cities and regions that are exempt from the strictest rules. The landscape has shifted permanently, and the smartest move is to understand the new reality.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read The Real Reasons Canadian Homeowners Are Selling and Downsizing.
Sources and Further Reading
How Government Policies Are Shaping the Future of Real Estate in Canada — A look at the broader policy trends affecting the housing market.
The Truth About Foreign Investors and Their Impact on Canadian Real Estate — How outside investment has shaped the market and the regulatory response.
LendCity (2026). Short-Term Rental Regulations Across Canada: City-by-City Guide. 🔗
TravelCultureLife (2025). 9 Canadian Cities About to Limit Short-Term Rentals. 🔗
Canadian Bar Association (2025). Municipal Land Use Planning Law: How Short-Term Rental Regulations Impact the Canadian Housing Crisis. 🔗
