New Rules for Quebec’s Short-Term Rental Market

The Government of Quebec Tightens the Rules Regarding the Short-Term Rental of Buildings and Dwellings

Given the increasing popularity of the short-term rental of buildings and dwellings, the Government of Quebec has tabled an additional draft regulation to the existing framework governing the short-term rental of property (the “Regulation”).

This additional Regulation which was adopted pursuant to provisions of the Act respecting tourist accommodation establishments[1] (the “Act”) will apply to all short-term accommodation, such as rentals published on websites such as Air BnB, HomeAway, Kijiji, Facebook, etc. This Regulation will also apply to housing that is not published online.

The Regulation, which will modify the Regulation respecting tourist accommodation establishments[2], aims to create two categories of residence: the primary residence and the secondary residence.

The primary residence

The primary residence is where the property owner resides. Each person can only have one primary residence. The new regulations will be more stringent for this type of residence.

If a tenant wishes to sublease their primary residence for a short term, they will need to obtain the prior consent of the building’s owner. A tenant who resides in a divided co-ownership must obtain permission from the condominium association prior to renting the condominium for tourism purposes.

In order for landlords to lease a primary residence for a short term, they must obtain an establishment number from the Government of Quebec and collect the 3.5% Tax on Lodging. The government-issued establishment number of the property must be visible on any advertisement or announcement relating to the short-term rental of a property.

To qualify as a primary residence:

• the landlord must reside there regularly;
• the address of the residence must be landlord’s registered address with the government;
• no meals should be served to the tenants of the short term lease; and
• there should be no more than one reservation per day.

The secondary residence

Buildings acquired for rental purposes, income properties, and cottages will be identified as secondary residences and commercial establishments if:

• they are rented for less than 31 consecutive days; and
• the availability of the unit is made public through the use of any media.

Secondary residences will be subject to the same requirements as primary residences. However, landlords must also obtain the classification reserved for tourist accommodations as provided for in the Act in addition to obtaining an establishment number. This is obtained by making a request to Quebec’s Tourism Industry Corporation. The person submitting the request must sign the application, which should contain the following information:

• the name, address and telephone number of the person operating the facility;
• the Quebec Business Number if it is a legal person that operates the tourist accommodation establishment;
• the name of the tourist accommodation establishment;
• the address of the establishment;
• the types of accommodation units;
• the 12-month operating period of the facility; and
• a description of the services offered.

The application must also be accompanied by the following documents:

• when applicable, a document authorizing the representative of the person operating the establishment to submit the application;
• a copy of the property title or municipal tax bill for this establishment or, if it is a tenant, a copy of the lease agreement; and
• proof of liability insurance.

Additional municipal intervention

Although this by-law is a project of the National Assembly, municipalities may also impose restrictions on this type of housing. For instance, on June 12, 2019, the Borough of Ville-Marie adopted a draft by-law limiting new tourism residences to a specific sector, imposing a minimum distance of 150 metres between two tourism residences, and abolishing the maximum proportion for tourism residences to be respected within the same building. In addition, the Borough of Ville-Marie now prohibits key boxes on public property. Like any other tourism establishment, the Borough of Ville-Marie also requires a municipal compliance certificate for residences rented for tourism purposes.

That being said, be sure to check with municipal authorities before purchasing a building for tourism purposes. Some municipalities may require impose more formalities, and these restrictions will vary depending on where the property is located.

Penalties

The Government of Quebec has vowed to strictly enforce this Regulation and punish those who do not comply with it.

A warning will be given upon the first offence. For repeat offences, daily fines range from $1,000 to $10,000 for individuals and $2,500 to $25,000 for corporations.

It should be noted that municipal authorities may also impose additional regulations while enforcing provincial regulations.

How can KRB Lawyers help you?

Before this regulation comes into effect next fall, it is essential for those who would be interested in this fast-growing industry to be diligent and to obtain a government classification certificate from the Ministry of Tourism. KRB Lawyers are familiar with this field of business and can advise and assist you in this type of project.

[1] L.Q. c E­-14.2

[2] R.Q. c E-14.2, R1