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Executive Summaries Jan 21, 2020

Tourist Accommodation and Airbnb: Where Do We Stand?

On August 20, 2018, we published an article on the latest developments in short-term tourist accommodation. Significant changes had just been made to the Act respecting tourist accommodation establishments and the related Regulation. A few months later, an update is required as the legislation and regulations governing "Airbnb" type leases have been amended once more. 

Following these latest amendments,  Bill 49 (French only), which will amend the Act respecting tourist accommodation establishments, is the subject of much discussion. Although it has not yet been adopted, certain municipalities and the Fédération québécoise des municipalités have already expressed their dissatisfaction with the amendments proposed under this bill.

Bill 49 provides that municipalities will no longer be able to prohibit tourist rentals if citizens rent their primary residence and comply with provincial regulation requirements. Some believe that these provisions undermine the role of municipalities in regulating uses on their territory, and fear that residential neighbourhoods could be transformed into commercial thoroughfares.

We believe that it is reasonable to argue that municipalities could regulate tourist accommodation in a primary residence if such regulation does not prohibit this kind of accommodation. In fact, this is not unlike what Quebec City has done by permitting tourist accommodation, known as collaborative accommodation, in a primary residence in a residential area, under certain conditions. Other cities including Montreal have fixed quotas for this kind of accommodation by providing for a minimum distance of 150 metres between two tourist accommodation residences. In this way, municipalities could retain a certain level of control over tourist accommodation within their territory, even those in primary residences. Evidently, this is our interpretation of the current provisions of Bill 49. As this bill has not yet been adopted, the provisions are subject to change.

What we do know is that we will be closely monitoring the passing of this bill, as a number of stakeholders have already indicated that they have representations to make against it.

Other Recent Changes

The  Regulations Amending the Regulation respecting tourist accommodation establishments("REHT")(French only) has already been adopted and will come into effect on May 1, 2020.

This new REHT modernizes the regulatory framework by cutting down on administrative formalities surrounding the monitoring of tourist accommodation, particularly with regard to primary residences.

New category of tourist accommodation establishment : primary residences

An important amendment to the REHT is the creation of a new category of tourist accommodation establishments applicable to individuals who use their primary residence as tourist accommodation.

The new REHT provides for a simplified online application process for individuals who wish to offer their primary residence for rent, a new form of classification certification specific to this category entitled "certificate of primary residence" and reduced administrative fees.

Under the new provisions, a "primary residence" is defined as a residence where :

  • The operator of the accommodation, an individual, usually lives;
  • The individual's family and social activities are centralized;
  • The residence address is the address that the operator provides to government departments and agencies.
Therefore, it is understood that an individual cannot have more than one primary residence.

In order to benefit from the relief provided for in the new REHT for the category of "primary residence" tourist accommodation establishments, the rental of a primary residence must, in addition :

  • Be offered to one person or one group of related persons at a time;
  • Not include meals served onsite;
  • Not exceed one reservation per day. This means that an individual would not be able to rent rooms in its primary residence separately by means of multiple reservations, or to rent rooms to groups of people who are not related.

In these cases, a citizen who rents his or her primary residence to tourists, even if only for a few consecutive days, will be exempt from holding traditional classification certification, which also means that their residence would continue to be taxed at a residential rate. Under the former REHT, classification certification allowed municipalities to tax the property at a commercial rate, which can be substantially higher.

New definition of "tourist accommodation establishment"

The new REHT simplifies the definition of tourist accommodation establishment.

The old definition made its application challenging, especially due to the fact that, in order to be subject to the REHT, rental offers from tourist accommodation establishments had to be made on a "regular basis," which left room for interpretation. This notion of a "regular basis" no longer applies to the new definition.

Henceforth, a tourist accommodation establishment will be defined as any establishment in which at least one accommodation unit is :

  • Available for rent;
  • For a fee;
  • For a period not exceeding 31 days;
  • Where availability is advertised through any media.

Establishments that come under this definition will be subject to the provisions of the  Act respecting tourist accommodation establishments and will therefore be required to hold classification certification. Let's not forget that tourist accommodation establishments that qualify as a primary residence will be subject to different rules.

Authorization from co-owners and/or owners 

In all cases, the new REHT now requires a co-owner who wishes to offer for rent their accommodation in a divided co-ownership building (a condo building, for example) to :

  • Produce a copy of the provisions of the declaration of co-ownership that permit the operation of tourist accommodation; or
  • Obtain prior authorization from the condominium association.

Similarly, the new REHT provides that a tenant who wishes to offer their accommodation for rent as tourist accommodation must either :

  • Provide a copy of the lease which indicates that the establishment may operate as tourist accommodation; or
  • Obtain the owner's permission to do so.

It is therefore vital that condominium associations and owners of rental properties take time to reflect before consenting to tourist rental activities in order to establish rules that will ensure harmonious cohabitation.

For further information on new developments in the field of tourist accommodation, please don't hesitate to contact  our team.

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