Municipal zoning by-laws, condo by-laws and renting investment properties to student tenants

I recently received an email from somebody that included the following question:

Hi.  I am wondering if you may have some insight regarding a condo situation we have in London.  We have purchased a two bedroom condo and the condos in the building are called  “single family dwelling”.

I have heard from some people that this means the people in the condo must be related to each other however, I am aware of lots of people in the building who are good friends and are not related to each other living together.

We were planning to find a paying roommate for my 20 year old son but we are concerned about what the definition of “single family dwelling” is.

To me, outside of living with your spouse or common-law partner, many people live with friends in our society.  Do you know if such a rule is enforceable?  Do you have any suggestions as to where I should go to figure this out? I would hate to have to move out of the building due to this rule.

I predict that this is going to become a more common question.

The Student Rental Market
Renting to students in Ontario is a niche market. In my experience, in can be one of the best ways to invest in rental property. It’s a simple scenario. There are two ways to rent to students:

1. The property is rented as a single unit to a number of students who will divide the rent.

or

2. You can rent individual rooms to individual students.

Municipal Zoning by-laws

Leaving aside the question of finding a suitable investment property and how to find suitable student tenants, one must also consider all relevant zoning by-laws. Why is this  a  possible issue? The answer is that students are unrelated people  and municipal by-laws often limit the number of unrelated people who can live in one house. In general, municipal by-laws restrict the way that properties can be used. An interesting example is described by the zoning by-laws in the City of Calgary.

Condominium by-laws

In addition to municipal zoning by-laws, condominiums may have their own by-laws. In other words, condominium by-laws can add a further layer of restrictions on the use of property. For example, a condominium by-law could restrict having a pet in a building.

The key points are that:

1. Municipal and condominium by-laws restrict the use of properties; and

2. The restrictions may affect the use of the property as a rental.

Therefore, in addition to investigating the property and the rental market, one must also investigate relevant by-laws.

Consider the following debate taking place in the City of Guelph. You will find interesting commentary here and here.

Landlord licensing? By-law on steroids?

Some municipalities have introduced the idea of “landlord licensing“.  In fact landlord licensing became an issue in the 2010 Toronto election. So, far this idea has not gotten traction. Nevertheless, those landlords who are politically astute should keep an eye on this issue.