A Guide to Short-term Rental Laws in Ontario

Cottage rentals can make cottage ownership a worthwhile investment, but Ontario’s rental rules aren’t copy-paste. Each township writes its own playbook, then tweaks it.

If you’re renting now or shopping with Short Term Rental (STR) income in mind, the trick is knowing what’s universal, what changes by address, and how to launch without stepping on a by-law rake.

Here’s my plain-English guide and how my team at Cottage Vacations and Cottage Vacations Real Estate plugs in, so you don’t have to become a municipal policy expert.

Start With Zoning & Licensing

Start with zoning, then talk licenses. A license won’t override a “no” in the zoning by-law or planning permit system. Confirm that short-term rentals are a permitted use on your lot type, i.e waterfront versus in-town, can differ and watch for principal-residence rules, special resort categories, or areas where STRs are limited to tourist-commercial zones.

Once zoning is a yes, check the licensing framework: Is there a cap or moratorium? Do renewals auto-approve or do you reapply every year? How long after your file is “complete” will they decide? Those details control whether you launch in June or miss peak season.

Safety & Capacity Rules

Safety and capacity are non-negotiable. Every township cares about life safety and overuse. Expect smoke and CO alarms, extinguishers, safe egress, and sometimes a simple fire safety plan or inspection.

Guest counts usually tie to bedrooms and infrastructure: common formulas are two per sleeping room, sometimes two per room plus two overall, capped at a maximum. Septic sizing and shoreline rules are tightening; if the system was built for six and your ad says ten, you’ll be asked to reconcile that.

Parking is the sleeper issue; one space per bedroom (or per two guests) is normal, and street parking rarely counts. If you’re looking for winter rentals, start thinking about: snow access, heating redundancy, and lit paths to exits. Do the math before you publish: beds, septic, parking, egress.

Everyday Operations

Operations vary more than people think. Two rules swing the most by the township: local contact and public posting. Many municipalities want a 24/7 contact within a set distance who can respond fast to complaints. If you live in the city or travel, plan for professional coverage.

On advertising, more towns require your license number on every listing, plus house rules that match the by-law: occupancy limits, quiet hours, parking, and fire restrictions. Some require a signed guest code of conduct before arrival.

Enforcement isn’t just neighbour phone calls anymore – municipalities have gone as extreme as hiring software scraping platforms for missing license numbers and noncompliant properties on listing platforms like Airbnb and VRBO. Keep your listing truthful to the rules at your address and put expectations in plain sight so guests behave like good neighbours.

Managing Finances & Paying Taxes

Money and admin deserve the same discipline as marketing photos. Many areas charge a Municipal Accommodation Tax (MAT) on short stays; sometimes platforms collect it, sometimes you do. At the federal level, cross $30,000 in taxable supplies and HST registration comes into play, price accordingly, and get advice from your accountant.

Preparing to invest in Cottage Country? Explore more insights about the cottage market in Ontario in these related readings.

Insurance For Short Term Rentals

Insurance matters: standard homeowner policies don’t always cover short-term rental activity or liability; ask for an STR-ready product. Build a simple compliance binder: license, zoning confirmation, insurance certificate, fire checklist, septic documents, parking diagram, guest rules, and a complaint/resolution log. Keep a digital copy and a slim on-site version. It makes inspections, renewals, and future buyer diligence painless.

Know Before You Buy

Buying with STRs in mind? Underwrite the use, not just the vibe. Can this address actually get a license now, or is there a cap? How do bedroom count and septic size translate into legal guest capacity? Is the driveway workable in January, not just July? What’s the township’s stance on bunkies and detached sleeping cabins?

Build a first-year budget that includes winter upgrades, safety gear, and a few operational “unknowns.” We run an address-level eligibility check before you write, pressure-test occupancy against septic and parking, model income with seasonality, and package it for your lender so underwriting doesn’t stall on assumptions.

If you buy a cottage with our team, we’ll do a comprehensive STR eligibility check on your subject property: zoning fit, licensing path, timeline, and a realistic occupancy and rate ladder by season. During due diligence, we will help you navigate and assemble forms, book any inspections, finalize safety gear, draw your parking plan, load house rules, line up cleaners, and secure local contact coverage, so you can close feeling secure and with a plan in place.

Selling Your Short Term Rental

Selling a STR? Think “plug-and-play.” Buyers will pay for certainty: current license (or clean path to renewal), safety concerns, MAT/HST processes, and listings that already meet advertising rules.

If you sell your cottage with our team, we can do this for you. We bundle your binder: license, inspections, safety logs, septic receipts, parking diagram, guest code of conduct, complaint log, and performance snapshots, so a rental-motivated buyer can say yes without guessing.

Work With Cottage Country Experts

Our job is to take a moving rulebook and turn it into a straightforward plan for your property. We manage and sell cottages across Cottage Country, the same markets where rules are constantly evolving.

We talk to by-law offices, sit on boards with council, read the updates, then convert policy into checklists and done-for-you submissions. If you want a short-term rental that’s profitable, compliant, and neighbour-friendly, let’s talk.