Guide to Prince Edward Island Short-Term Rental Regulations
Home to incredible beaches and pastoral scenes, Prince Edward Island is a popular spot for quick getaways. The demand for short-term rentals makes it a great investment opportunity.
Prince Edward Island regulates tourist accommodation as a way to boost the local economy while looking after its community. Before setting up a business there, it’s essential to get acquainted with all the requirements.
Let us show you everything you need to know about Prince Edward Island’s short-term rental regulations.
Disclaimer: Our guide is intended for informational purposes only and doesn’t constitute legal advice. For guidance on specific cases, please consult a property lawyer.
Short-term rental regulations on Prince Edward Island
Under the Tourism Industry Act, you’re required to register any tourist accommodation where you host guests for under a month. There is a five-step process:
- Register your business using the online corporate registry
- Apply for a Tourism Establishment License using the self-service portal
- Pay the $180 application fee
- Get a water test (if you’re using well water)
- Schedule an inspection with Quality Tourism Services (QST)
After you’ve opened, you must report your monthly occupancy levels to the tourism board. You must also continue to get well water tested every three months. Both chemical and bacteria tests are free for residents of Prince Edward Island.
Note that ‘tourist accommodation’ refers to any place where you host guests without serving them food or beverages. That includes buildings like hotels and hostels and temporary structures like campsites and caravans.
Tax requirements for Prince Edward Island short-term rentals
Like all other Canadian businesses, short-term rentals are subject to 38% corporate income tax. This is usually around 15% to 28% after reductions.
Short-term rental operators can also expect to pay:
- Provincial corporation tax: Prince Edward Island has a 16% income tax rate. If you qualify for the small business deduction, the rate falls to 1% for your first $500,000 of income.
- Harmonized Sales Tax (HST): You must remit 15% of any goods and services sold on Prince Edward Island.
- Tourism Accommodation Levy (TAL): Some municipalities on Prince Edward Island charge require short-term rental operators to remit a small percentage of every booking.
Short-term rental rules for popular destinations on Prince Edward Island
Prince Edward Island gives cities and towns the power to set their own short-term rental regulations. Here’s a look at the laws and guidelines for some of the province’s most popular places:
Charlottetown
Charlottetown is the hub of Prince Edward Island. As one of the
fastest-growing cities in Canada, it draws a lot of visitors and investors. However, its restrictive tourist accommodation laws make it a better option for individuals than property management businesses.
You can only operate a short-term rental business out of your principal residence. That means the place where you live and spend most of your time. What’s more, you can only accept one booking at a time.
If you have a secondary suite, you may host guests there provided the owner remains on the premises for the entire stay.
The city of Charlottetown also requires everyone to obtain a municipal license for their business. To apply, complete the
Tourist Home form and attach the following:
- Floor plan
- Emergency exit plan
- Parking plan
- Proof of ownership
- Proof of principal residence
- Proof of $2 million in insurance
The licensing period runs from April 1st to March 31st every year. Apply in advance as you can’t accept guests until your application has been formally processed.
Charlottetown applies a 3% TAL on all bookings under 30 days in duration. You must pay this amount to the city’s Finance Department every month. When you renew, you must provide of remittance with your application form.
Summerside
Prince Edward Island’s second-largest city has just as much to offer as Charlottetown. The short-term rental regulations are also generally more permissive.
Tourist establishments are allowed in specific areas throughout the city. However, you must obtain a
building permit and a
conditional use permit before you start accepting guests. Both forms require extensive details about your rental property and the nature of your business.
Summerside doesn’t permit the use of secondary suites or accessory dwelling units. That means you can’t split your property into self-contained apartments or build additional structures on your land. You may only lease the main property to guests.
Victoria-By-The-Sea
If you’d prefer to stay close to Charlottetown, this historic fishing village is an excellent option. It’s just a 30-minute drive from the capital.
Victoria has well-established short-term rental regulations so they’re unlikely to change. The main consideration is the zoning bylaws. You’re only allowed to operate the business out of your primary residence in certain areas.
Stratford
Stratford is one of the
fastest-growing towns in Canada, creating a lot of opportunities for potential investors. It also has some of the lowest tax rates in the province.
While the town doesn’t currently have any regulations, that’s all set to change. The local government is in the early stages of developing bylaws. Councillor Jeff MacDonald said in a recent interview that they’re taking inspiration from other cities on Prince Edward Island but ultimately want laws that work for their own residents.
The Resort Municipality
In the north of the island, there’s a cluster of small towns including Cavendish, Stanley Bridge, and North Rustico. These act as one municipality governed by a single set of bylaws.
As the north is a resort area, the short-term rental regulations are relatively lenient. You may require planning permission for your business, especially if you’re renovating the property. Note that the local government only gives residents a limited time each year for construction projects.
Applying for permission is an informal process. Request a form from the council and send the completed version back with the property owner or agent’s signature. The council decides the application fee on a case-by-case basis.
Cornwall
Cornwall is a relatively new town on the west coast of the island. As it’s rapidly growing, there are plenty of opportunities for potential investors.
The town doesn’t currently have any short-term rental laws. As a tourist establishment, you just have to provide one parking spot per guest.
However, prepare for this situation to change. Council members for Cornwall have started discussing the possibility of introducing vacation rental legislation. The chair of planning, Jill McIsaac said, “I would like to see some sort of policy or bylaw or resolution come forward.”
If Cornwall introduces new legislation, it might look similar to their current rules for bed and breakfasts. Namely, the host may need to live on the property.
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Resources
- Tourist Accommodation Starter Guide, Tourism PEI
- Corporation tax rates, Government of Canada
- Prince Edward Island – Provincial corporation tax, Government of Canada
- Harmonized sales tax, PEI
- Short Term Rentals & Tourism Accommodation Levy FAQs, Charlottetown
- Tourist home, City of Summerside
- Community of Victoria Policy, Tourist Accommodations
- Why this growing P.E.I. town wants to address its short-term rental bylaw gap, CBC News
- Permits and licenses, Resort Municipality
- Bylaws, Resort Municipality
- Zoning and subdivision control, Cornwall
- Municipalities across P.E.I. grapple with short-term rental regulations, CBC News
