Kelowna could see an easing of short-term rental restrictions

Relaxing Airbnb rules?

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Kelowna council could relax short-term rental rules

With a rental vacancy rate expected to rise close to 6 per cent and a healthy number of rental properties coming onto the market, the City of Kelowna is looking at relaxing its short-term rental regulations.

B.C. cities have the ability to opt out of provincial short-term rental regulations if their rental vacancy rate reaches three per cent or higher in two consecutive years.

Kelowna’s 2024 vacancy rate was pegged at a 20-year high of 3.8 per cent.

Anticipating another healthy vacancy rate when figures are released by CMHC in the next few months, planning staff will recommend to council Monday the city opt out and offer partial exemptions.

Planning staff went through the pros and cons of three options — retaining the status quo, providing partial exemptions or full exemptions.

The status quo was not recommended as it has impacted several developments intended for resort-style accommodation and limited the variety of accommodations available in the city.

A full exemption is also not recommended as it would likely lead to increased housing speculation and housing prices and at the same time drive down the vacancy rate quicker than other options.

The option recommended would provide partial or limited exemptions through zoning to limit principal use short-term rentals.

“With this approach, a new short-term rental subzone could be established,” staff stated in its report for council.

“This zoning could be used to limit the scale and impacts of an exemption request.

“Staff reviewed properties that were recognized as permitted short-term rental as a principal use prior to the implementation of provincial regulations in January of 2024. This included approved, pending and historic licenses.”

Staff said the option would allow for housing gains already made to continue while also supporting tourism.

Current short-term rental regulations within the city have yielded both positive and negative results.

While rental rates and housing prices have come down and the vacancy rate has trended upward, the city has received feedback on the negative impacts to condo-presales curtailing construction of new housing units and claims the regulations resulted in a decline in tourism and business in 2024.

If the vacancy rate is above three per cent as anticipated, the city has until March 31 to inform the province of its desire to opt out of provincial requirements.

Any new regulations wouldn’t take effect until Nov. 1.

If the city does opt out or the short-term rental act, it remains so permanently regardless of the rental vacancy rate in future years.