What are Rental Restrictions in Condos?

20.04.2015

What do Rental Restrictions Mean for Home Owners?

Every strata property (whether condo or townhouse) has certain rules and bylaws that owners need to follow. These rules and bylaws were agreed to by the original owners, and can be changed or updated with approval from 3/4 of the owners (done as a vote during a Strata meeting). Any new owners in the building are agreeing to these rules when they become homeowners – don’t worry, you have the opportunity to go through all of the strata documents and rules prior to official buying a home in the strata.

One important consideration to these rules are the restrictions on the number of rentals allowed in the building. Restrictions on rentals ensures that the building is occupied by owners (who arguably care more about the maintenance and upkeep of the building) and can be limited for security purposes (as keys aren’t constantly changing hands between new residents). Owners who are looking to rent their unit need to get strata approval, which is something that can’t be unreasonably withheld unless it goes against these rental restrictions.

Types of Rental Restrictions

Rental Restrictions can limit the number of rental unit allowed in a building, and can do seen in a number of ways

  • No rentals at any time (to dismay any investors)
  • Only a certain number of units in the building can be rented at one time
  • Owners must live in the building for a certain period of time prior to being allowed to rent their unit (to dismay investors)
  • Leases are restricted to one year periods (to dismay long term investors)
  • No short term rentals allowed (to dismay Air BnB or vacation rentals)
  • No rental restrictions! As long as landlords submit proper documentation to the Strata, you can rent your unit at any time

Typically, and this is by no means a blanket statement, newer condo buildings allow rentals without any restrictions, whereas many older buildings in the city are limited in the number of rentals they allow.

It is more common for buildings to have some kind of a restriction on rentals, so looking for a condo that allows rentals can limit the number of options you’ll have when buying a home. 

Rental Wait Lists

If a building has already “maxed out” it’s number of rentals, owners can be put on a Wait List that kicks in as soon as a new rental spot opens up. At that point, the first person on the list typically has a month or two to rent out their unit, otherwise the rental allowance drops down to the next person in line. Keep in mind that a lot of owners put themselves on the wait list just in case they want to be able to rent their unit (since those spots don’t come up too often), so even though there may be 5 people on the wait list ahead of you, they may choose not to rent their unit when their chance comes.

At the end of the day, if a building has “maxed out” their rentals, there is NO guarantee that you’ll be able to rent the unit when you need too.

Rental Restriction Tips and Information

A couple things to note about rental restrictions that can make a difference for home buyers:

  • Parents and Children do NOT count towards rental restrictions, which means home owners are allowed to have their parents, or their children live in the unit at any time
  • Rental restrictions can change with a 75% vote of approval from home owners (to allow more or less rentals)
  • Strata’s can allow rentals to an owner facing hardship. This means that even if the building has “maxed out” their rental allowance, if someone is going through hardship (anything from going through bankruptcy, having been relocated for work for a short period of time, are unable to sell their unit, etc) the strata may grant that particular owner the chance to rent their unit. Typically the Strata limits the length of the rental in this case, but it may be an options if extreme situations
  • Buying from the Developer typically allows the Buyer to circumvent rental restrictions. A term in the Developer’s Contract called the “Rental Disclosure” stipulates the length of time (usually 100 years) in which the Buyer will be able to circumvent any rental restrictions instituted by the strata, thus allowing the Buyer to always be allowed to rent the unit. This key point is why a lot of investors focus on buying pre-sale condos (they will always be allowed to rent). If this “Rental Disclosure” was dated after January 1, 2010, this rental allowance is passed on to every forthcoming Buyer in the building until the date the “Rental Disclosure” expires.

We have a lot of clients who look for buildings that allow rentals, just in case their situation changes over time, or to give the owner flexibility to rent at some point if they won’t be living in the suite. On the flipside, we also have a lot of Buyers who would prefer no rentals in a building to ensure that the residents are productive members of the building’s neighbourhood feel and upkeep.

If rentals are important to you – let us know! This is something we’ll need to take into consideration in the search for your new home.

Let us know if you any any other questions on this topic, or anything else! We’re happy to help.

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