Suggested changes to County’s short-term accommodation licensing under review
Suggested changes to Prince Edward County’s short-term accommodations (STA) licencing are under review by municipal staff to create a report for council in May.
Councillor Kate MacNaughton proposed the municipality ban whole-home STAs unless they are seasonal cottages, cabins or grandfathered, and could allow homeowners to use their residences as an STA for a certain number of days per year (number not determined but suggested at 75).
The changes would have no impact on current STA licence holders. MacNaughton noted there is no intention to cut the number of current STAs despite outcry they are contributing to shortages of affordable housing and long-term rentals.
Her proposal seeks future licenses to be restricted to “natural person” owned, not by businesses.
Several members of the Licenced Short-Term Accommodators of Prince Edward County also spoke to council to state that many of the rentals are waterfront, or higher-end homes that would never be rented or sold as affordable housing. A few also spoke to difficulties being a landlord without as many protections as provided by services such as AirBnB.
“Many of the properties are not winterized for long-term rentals. And, after the cost of mortgage, property taxes, the rent that they would have to charge would be highly unaffordable,” stated Davelle Morrison, president of the accommodators group. “The biggest reason that many STA owners won’t do long-term rentals is because they have been burned before by tenants who damage their property or refuse to pay rent for months on end.”
She also pointed to the lack of hotels in the County and stated without STAs, the region will become a day-tripper’s paradise causing problems for restaurants and other businesses.
Councillor John Hirsch noted intention “to make some exemptions for the cottage industry which we really didn’t have in place before. It’s intended to make an exemption for folks who want to rent out their home for a few weeks a year when they’re away and we didn’t have that capability before. But, in essence, it will be capping future whole home STA creation.”
Recommendations proposed by staff also include mandatory display of license numbers on advertising, not allowing STAs in zones R3 and R4 that allow the newly-approved reduced lot sizes, and reduced time owners can be in breach of bylaws.
The report from staff also suggests seeking to restrict STAs enough to allow residents the opportunity to earn an income from the STA market while increasing the stock of multi-family units and housing which is most suitable to attainable long-term rentals is protected.
Also included:
– Stronger evidence of “legal non-conforming use” that owners operated as a short-term accommodation in the form of a signed affidavit;
– A ‘cost acknowledgement agreement’ to use in the appeals process to recuperate the cost of staff time and an appeal form similar to those used in planning appeals.
– Reduced length of time STA owners can be in breach of bylaws to two notices in four months, from three notices in six months.
The potential changes are to be available for public feedback before being presented to council for final approval.
The staff review of the changes is to come before council in May. Staff also suggest the moratorium on whole home STAs be lifted when the amended bylaws are passed.
Last spring, council directed staff to study the effects of STAs and the licencing program on affordable housing the the community, as well as recommendations of potential improvements.
In November, council heard results of a study by Dr. David Wachsmuth, an associate professor at McGill and Canada Research chair in urban governance, considered one of North America’s experts in the study of STAs.
That study recommended a series of smaller best practices, notably limiting the impact of grandfathering as much as possible; prioritizing owner-occupied STAs, and making mandatory on all STA advertisements, the display of the operator’s license number.
The study indicates more multi-family home development is required, not only to increase housing stock, but as a type better suited to local demand and less likely to be diverted to an STA or second home.
Council has the discretion, under the Municipal Act, to attach new conditions to existing STA licenses – that also apply to grandfathered properties. While licenses do not transfer with the sale of a property, legal non-conforming status does, and will remain attached to the property indefinitely so long as the owner continues the non-conforming use in question.
The study found STAs are overwhelmingly whole-home (92.9 per cent) as opposed to owner-occupied and are concentrated in settlement areas, with Bloomfield in particular, having nearly one-third of its residences used as part- or full-time STAs.
The top 10 per cent of STA hosts, most of whom own more than one STA, account for 50 per cent of all revenue earned by the STA industry and 1/8th of revenue earned by the industry goes to individuals not residents in the County.
The study found that on average, 490 STA listings are active every day in the County, with an average price of $280/day ($138,000 per day), split between an average of 310 hosts, or $440 per host.
Active listings are those that are reserved or available for booking on STA rental platforms, and excludes listings that are visible but blocked off by the host – considered to be inactive listings.
STA nightly prices have spiked more than 40 per cent in daily revenue from 2019 to 2021 since the start of the pandemic, as the total number of STAs has also fallen by nearly that same amount (38.3 per cent).
This market behaviour is, according to the study, “among the lowest relative number of active STA listings and STA reservations… but by far the largest spike in nightly prices [in Canada].”
Wachsmuth stated license compliance is relatively high at an estimated 67.5 per cent, contrasting that Montreal’s STA compliance rate is about five per cent.
In terms of the effect on the housing market, average housing prices in Prince Edward County have skyrocketed by 400 per cent since 2008 – almost 200 per cent of which came between 2008 and 2018 ($205,000 to $395,000), and the remaining amount from 2018 to 2021 (up to an all-time high of $861,000 for an average home sale in December 2020).
Total home sales have risen commensurately, nearly tripling from 2019-2021. The study confirms this has “induced a strong affordability gap between the average income of County residents and housing and rental prices: a median affordability gap of $47,760/year for homeowners, and $318/month for renters in Picton.”
Finally, the study found that of the home sales made in 2016-2017, roughly half of them can be attributed directly or indirectly to new STA activity, but that number fell by half (23.2 per cent) in 2020.
