British Columbia Passes Bill 35, Advancing the Homes for People Action Plan and Addressing Short-Term Rental Surplus

December 20, 2023

Written By Michelle Yung and Hannah Johnston

On October 26, 2023, Bill 35, the Short-Term Rental Accommodations Act, received royal assent. Bill 35 was introduced as part of the NDP’s Homes for People Action Plan to combat the housing crisis and intends to regulate short-term rental listings of less than 90 days. It amends the Local Government Act.

The following discussion highlights the most significant impacts arising from Bill 35, who exactly falls under the new legislation and how short-term rentals booked after May 2024 may be impacted. This blog post is current to December 7, 2023.

The Short-Term Rental Landscape

Bill 35 builds on the Government of British Columbia's prior measures under the Speculation and Vacancy Tax Act (SVT) to tackle the issue of high rates of vacant homes.

According to the Province's Technical Briefing of October 16, 2023, there are currently 28,000 short-term rental listings in British Columbia, which reflects an increase of 20 percent in the last year. As a result, more than 16,000 entire homes—meaning units listed for the majority of the year—have been pulled out of the housing market. With the provincial vacancy rate sitting at 1.3 percent, the government is determined to turn housing units in British Columbia into long-term homes for people.

Specific Requirements

Bill 35 requires a person who offers a unit (a host) for short term rental to obtain a business licence and to be registered under a newly-formed registry.

The short-term rental offer must now display the following:

• a valid business licence number;
• a valid registration number; and
• any information to be prescribed by regulation.

If either the business licence or provincial registration number is missing from the short-term rental offer, the short-term rental platform must remove the offer at the request of the local government.

Platform Service Providers

A host, or platform service provider, responsible for the offer must ensure their short-term rental offer is registered. Under Bill 35, a "platform service" is defined as "the facilitation of promotion and transactions for reservations and payments related to short-term rental accommodation services in British Columbia, provided by a platform" and includes Airbnb, Vrbo and other online listing forums such as Facebook Marketplace and Kijiji.

Each platform service provider will also be required to have a representative located in British Columbia to confirm the validity of the host's registration number and request that the host remove an offer if the relevant local government determines that it is not compliant with the business licence. The representative will also need to record, maintain and disclose to the Minister of Housing records of any short-term rental information provided to the platform service provider.

Principal Residence Limitations

Short-term rental offers will be limited to a structure within a host's principal residence. Bill 35 permits hosts to rent their principal residence (the residence an individual lives in for a longer period during a calendar year than any other place) plus one secondary suite (a self-contained living unit with its own kitchen, sleeping area, and washroom facilities, which is contained within a dwelling unit) or accessory dwelling unit (a self-contained living unit with its own kitchen, sleeping area, and washroom facilities, which is located on the same property as a dwelling unit).

If the principal residence requirement applies to a short-term rental offer, the application for registration or renewal of registration must include a declaration that is made in the form and manner required by the registrar and must include any prescribed information or documents. This affects municipalities with a population of 10,000 and over, and smaller neighbouring communities. Notably, this includes Vancouver and Kelowna, but excludes, for instance, Whistler and Tofino.

The Province will establish an annual process where certain local governments can request to "opt-out" of the principal residence requirement if that community can demonstrate it has sustained a rental vacancy rate of 3 percent or more for two consecutive years. For 2024, a local government's request must be submitted to the Province by February 29, 2024, to opt-out before Bill 35 comes into effect. Communities exempt from the principal residence requirements may also be included if a local government requests to “opt-in” by March 31, 2024.

Exemptions

These new requirements will not apply to reserve lands, Nisga’a Lands or the Treaty Lands of a Treaty First Nation—unless the Nation chooses to opt into all or part of the legislation through a coordination agreement with the province. Bill 35 also does not apply to hotels, motels, vehicles or tents or other temporary structures.

Certain types of accommodation that are unsuitable for permanent housing will be exempt from the principal residence requirement. This includes:

• strata-titled hotels or motels where owners own separate strata lots but cannot use them as their principal residence because of a mandatory rental pool or rental management agreement;
• time share properties;
• home exchanges (or house swapping) arrangements;
• fractional ownership properties, where the owner may not use the property as a principal residence because of rules outlined in the fractional ownership agreement;
• lodges (i.e., overnight accommodation provided by an operator of outdoor recreational activities such as hunting, fishing, water sports etc.);
• living accommodations primarily for students and employees of an educational institution and that is owned or operated by the institution or a non-profit organization; and
• strata corporation guest suites.

Proposed Timeline

Bill 35 has a phased approach. Regional districts have been able to issue business licences and increase maximum penalties since Bill 35 received royal assent.

Effective May 1, 2024, the new provincial principal residence requirement will come into effect, and protections for non-conforming use of property will no longer apply to short term rentals. In some areas, these protections have historically allowed hosts to continue to use their property for short-term rentals even when contrary to the new rules established by the local government. Certain communities can request to opt-out by February 29, 2024, and opt-in by March 31, 2024.

Lastly, data sharing, where short-term rental platforms will be required to share information about short-term listings with the province, will begin in summer 2024, and the provincial registry launch, requiring platforms to remove listings without valid provincial registry numbers, is expected to come into effect by late 2024.

On December 7, 2023, British Columbia issued regulations under Bill 35 with further regulations expected to be made in 2024. A proclamation for Bill 35 has not yet been issued.

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