Introduction
Prince Edward County’s housing crisis is no longer a forecast—it’s a reality. As real estate prices climb and long-term rentals vanish, one force has quietly reshaped our housing landscape: the rise of short-term rentals (STRs). Once positioned as an economic boost, STRs have increasingly hollowed out the residential market, displacing families, limiting workforce housing, and inflating property values.
This article presents a data-driven case for a complete phase-out of non-principal residence STRs over the next three years. Backed by academic research, municipal data, and lessons from other jurisdictions, it outlines why bold, time-bound action is essential to restore balance, protect neighbourhoods, and ensure that Prince Edward County remains a place where year-round residents—not absentee investors—can afford to live.
The Evidence: How STRs Are Fueling Housing Scarcity in PEC
Highlights
In larger cities, policies like 28-day minimum stays in Toronto and Ottawa saw commercial operators hoard listings—ultimately causing only marginal improvements in availability (~1% rent price impact).
Top 10% of STA hosts (many with multiple units) earn 50% of total STR revenue — removing many units from permanent use.
Housing Market Distortions
- From 2016–2017, approximately 50% of home sales in PEC were tied to short-term accommodation activity. That share dropped to 23.2% by 2020, but nonetheless reflects the heavy influence of STRs on real estate pricing and availability.
- A municipal advisory noted a staggering $47,760 annual home affordability gap and $318/month rental gap in Picton—partially attributed to STR-driven demand surge between 2019–2021.
STR Market Metrics
- AirDNA reports there are around 1,541 active STR listings in PEC, with an average annual revenue of $24,900, an occupancy rate of 51%, and an ADR (average daily rate) of ≈ $318.
- The decline from peak pandemic levels (revenue near $70K, occupancy 82%) suggests current listings were previously even more aggressive in capturing housing stock.
Provincial and National Comparisons
- Ontario-wide, STRs led to the removal of an estimated 12,860 long-term rental units as of December 2022—a 11.2% increase year-over-year.
- In larger cities, policies like 28-day minimum stays in Toronto and Ottawa saw commercial operators hoard listings—ultimately causing only marginal improvements in availability (~1% rent price impact).
Why PEC Needs a Full Ban
- Exhausted Rental Market: Only 18.4% of PEC households rent, far below the provincial average of 31.4%—not from lack of demand, but shortage of supply pelc.ca.
- Displacement & Price-Gouging: STRs—especially those operated as commercial ventures versus owner-occupied homes—disincentivize long-term tenancy, and inflate neighbouring property values.
- Uneven Benefits, Social Disruption: Top 10% of STR hosts account for 43.8% of rental revenue in Ontario, and often operate multiple listings—removing many units from permanent use.
- Local Economic Strain vs Benefits: Though tourism supports PEC’s economy, STR income doesn’t equitably distribute—permanent residents bear infrastructure costs without benefit.
Lessons From Other Jurisdictions
- Toronto & Ottawa require that STRs be the principal residence only, with licensing and caps—but they have yet to meaningfully restore rental stock or affordability.
- Some cities impose annual caps (e.g. 1%) or bans—as in Santa Monica, Portland, San Diego, or Berlin, where rentals are limited to primary residences or banned in residential zones altogether.
- These measures effectively returned lost housing to tenure pools and reduced speculative buying.
3-Year Sunset Plan: Path to Rebalance Housing
| Year | Action Items |
|---|---|
| Year 1 (Immediate – 2026) | ‣ Freeze all new STR licensing for secondary residences ‣ Audit and map all current licenses ‣ Inspections and enforcement on compliance ‣ Begin transition support programs for affected hosts |
| Year 2 (2027) | ‣ Only principal-residence STRs permitted ‣ STRs limited to max 90 nights/year ‣ Convert expired or vacated STR units to long-term rental obligations via bylaw or incentive |
| Year 3 (2028) | ‣ Full ban on all STRs except for rare home-share instances (<30 days, host present) ‣ Redeployment of freed units into affordable or workforce housing fund ‣ Offer grants or property-tax credits to homeowners who agree to long-term rentals |
Expected Impacts
- Releases approx. 1,500–2,000 units (assuming half of 1,541 listings convert over three years)
- Reduces median house price pressure by limiting short-term investment demand
- Expands long-term rental tenure, reducing vacancy rate and increasing rental stock
- Improves year-round community character, reducing noise and turnover from transient occupants
Why PEC Must Act Now
Short-term rental platforms like Airbnb offer convenience—but community cost. In PEC, an over-reliance on STRs is draining rental supply, inflating housing costs, and altering the character of residential neighbourhoods. The evidence shows a direct link between rapid growth of vacation homes and affordability crises. Implementing a sunset ban over three years allows for fair transition, supports existing small-scale hosts, and prioritizes long-term residents and families
Current Short-Term Rental Policy in Prince Edward County (PEC): What You Need to Know
As of June 2025 — based on municipal bylaws, public documents, and local reporting.
Overview of STA Licensing Framework
Prince Edward County regulates short‑term rentals through By‑Law No. 108‑2021, amended by 75‑2022, under its STA (Short-Term Accommodation) licensing program. STAs are defined as any dwelling rented for less than 30 consecutive days, including:
- Primary Residence STAs (owner-occupied)
- Secondary Residence STAs (“whole-home”)
- Bed and Breakfasts (up to four rooms/suites)
Municipal types like hotels or motels are excluded.
Secondary Residence STA Freeze (Whole‑Home Rentals)
On September 20, 2022, Council voted to stop issuing new secondary residence STA licenses for applications submitted after that date. Only properties already licensed before then were grandfathered and retain their legal non-conforming status—provided they meet renewal and compliance requirements. These grandfathered STAs continue to be renewed—but new whole-home listings are no longer permitted.
Primary Residence STAs Allowed (With Limits)
Primary residence STAs are still permitted—with these conditions:
- Host must reside in the property for at least nine months (or be present except 45 days/year).
- Rental limited to 45 days per calendar year if host is absent
- Compliance inspections and renewal required annually
- Properties must pass fire safety, zoning, insurance, and municipal standard checks
- STA license number must be displayed prominently on all advertisements; fines of $1,000 apply for non-compliance.
Geographic & Density Restrictions
STAs are only permitted in certain zones:
- Urban Residential (R1, R2), Hamlet Residential (HR), Limited Service Residential (LSR)
- Commercial zones (CG, CH, TC)
- Rural zones with farm-based accessory use (RU1–RU3)
- Properties existing as of October 9, 2018 can qualify under grandfathered rules
Density cap:
- Secondary STAs are limited to 15% of existing dwelling units within a set radius—120–500 m depending on the zone. Primary residence STAs are exempt from this density cap.
Fees & Fines
- Primary Residence: $200 per room in year one; renewal at $100 per room.
- Secondary/Home Rentals: $325 per room in year one; renewal $162.50
- Fines:
- $1,000 for failing to display STA license number
- Higher penalties ($10,000–$50,000+) for unlicensed or repeat violations
Market & Housing Impact (Staff Report Findings)
An STA impact study by McGill’s David Wachsmuth included data from 2016–2021, revealing:
- 92.9% of STAs are whole-home, not owner-occupied.
- Top 10% of STA hosts (many with multiple units) earn 50% of total STR revenue.
- In 2016–17, 50% of Picton home sales were tied to STR use; by 2020 this fell to 23.2%.
- Median housing affordability gap: $47,760/year for owners and $318/month for renters in Picton.
- STA revenues rose 40% from 2019–21, while physical STR listings declined by 38%—suggesting fewer, more commercialized units driving the market.
Summary: Current PEC STA Policy
| License Type | Allowed? | Limitations | Notes |
|---|---|---|---|
| Secondary (Whole-Home) | ❌ New not issued | Grandfathered only | Existing owners can renew |
| Primary Residence | ✅ Allowed | Host presence / 45-day limit | License and ad number required |
| Zone Permissions | Select Zones | Density cap of 15% for secondary STAs | Zoning and land use dependent |
| Fees & Fines | License cost ~$100–325/room | Fines up to $50K for violations | License renewals annually required |
Notable Implications
- No new whole-home STRs are being approved, though existing operations remain.
- Regulatory enforcement, including advertising rules and inspections, appear robust.
- Staff and housing stakeholders continue noting the strong link between STR prevalence and affordability challenges.
- The County is reviewing further policy changes, including possible caps or further transition restrictions on grandfathered licenses.