West Kelowna to exclude itself from provincial short-term rental regulations

Barona Beach Resort in West Kelowna. (Booking)

Some of the key measures of the Government of British Columbia’s short-term rental regulations will not apply to the City of West Kelowna.

Acting on the advice of City staff, West Kelowna City Council signalled this week it will opt out of some of the new provincial regulations requiring short-term rentals be only permitted in properties that are classified as the principal residence of the host.

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This exception will specifically apply to West Kelowna’s tourist commercial zones, which is a move that enables purpose-built commercial vacation properties such as Barona Beach Resort, Boucherie Beach Cottages, Paradise Estates, The Cove Lakeside Resort, and Casa Loma Resort to retain their longtime short-term rental operations.

A significant portion of these tourist commercial zones enabling large clusters of short-term rental businesses are located on the Okanagan Lake waterfront.

Short-term rentals within other types of zoning, such as residential zoning, will still need to abide to the new principal residence requirement.

Although there will be some exceptions to the principal residence requirement, West Kelowna will still follow the provincial government’s new short-term rental enforcement measures, such as displaying municipal business license and provincial registration numbers, and the removal of non-compliant listings on platforms such as Airbnb and Vrbo.

A public hearing will be held before City Council’s final approval.

Boucherie Beach Cottages in West Kelowna. (Kind Developments)

Under the provincial government’s legislation, municipalities have the ability to op-out of the principal residence requirement if they have a population of over 10,000 residents in the 2021 Census and a purpose-built rental vacancy rate of 3% or more for each of the previous two years, which demonstrates the conditions of a balanced rental housing market.

Based on the latest data from Canada Mortgage and Housing Corporation, West Kelowna’s rental vacancy rate reached 3.4% in 2022, and it further increased to 4.2% in 2023.

Municipal governments also have the option to opt-back into the provincial legislation by March 31 of each year.

The legislation already provides a principal residence exemption for municipalities with a population under 10,000 residents (except for small jurisdictions near large municipalities), resort municipalities (such as Whistler and Sun Peaks), mountain resorts, and select regional district electoral areas.

The province’s principal residence policy is intended to target operators who own and/or operate numerous short-term rental properties akin to a hotel business, particularly in areas where long-term rental housing demand is greatest for people who live, work, and study in their community.

Under legislation, the new provincial policies related to the principal residence requirement will come into effect at the start of May 2024, the listing platforms will be required to share their data with the provincial government starting in Summer 2024, and the provincial government will establish its own provincial host and platform registry by late 2024.

Conversely, in January 2024, on the opposite side of Okanagan Lake, the City of Kelowna approved short-term rental restriction measures that go far above and beyond the minimum requirements outlined by provincial legislation. By banning short-term rentals within principal or secondary residence use, Kelowna has effectively wiped out short-term rentals in its jurisdiction.

City of Kelowna has approved new restrictions that effectively essentially wipe out short-term rentals.

The regulations go above and beyond the new provincial policies. #bcpoli #vanpoli #vanre https://t.co/FVG788JeX9

— Kenneth Chan (@iamkennethchan) January 18, 2024

While such policies will help address housing affordability and supply issues, there are growing concerns there will be a forthcoming impact on the tourism industry and service-based businesses, especially in areas that have tourism-dependent economies, with the limited hotel room supply unable to fill the large void left by the shrinking short-term rental supply.

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