Should Vacation Rentals be Licensed and Regulated?

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Here’s an interesting viewpoint on the fast growing vacation rental industry:

“all vacation home owners who rent more than a couple of weeks in the year should be licensed and meet minimum standards for vacation rentals”.

I read this on a forum recently and it has been niggling at the back of my mind ever since. I don’t agree with it because it would require some form of local or provincial legislation; would need regulation; an inspection protocol, and some way of standardizing the thousands of rental cottages here in Ontario. Who would set the standards? Who would police such a system and what would this licensing accomplish?

Licensing systems already exist in 5 provinces across Canada: Manitoba, Quebec, New Brunswick, Nova Scotia, PEI and Newfoundland, with varying levels of success. The demands it places on owners are quite high as the following excerpt from the Nova Scotia licensing regulations show:

  • A manager must ensure that each rental unit or campsite does not contain any personal belongings of the manager or staff, or their families.
  • A manager must ensure that the kitchen and bathroom flooring in a rental unit does not consist of carpeting.
  • Facilities in rental units – all linens and towels to be provided and to be changed at least twice a week

Along with this, owners must provide the following:

  • Monthly occupancy report to government
  • Evidence of guest registration
  • Cancellation policy
  • Emergency plans including evacuation and telephone service

The advantages of licensing, according to a white paper on the Nova Scotia tourist accommodation act legislation include the delivery of tourism statistics to the provincial government, a rise in standards of accommodation, and accountability of the operators. The downside to the owner/operator are the costs involved in inspection and licensing fees, and upgrading to meet the standards. Benefits to the owners appear to be outweighed by these costs so, what has happened in many provinces is that property owners continue to operate under the radar, advertise privately, accept cash and don’t declare the income.

An alternative would be voluntary submission to a rating programme such as Canada Select but this appears to be more focused on the resort style of cottage property where standardisation is a little easier to accomplish. A quick look at the listings in Ontario show 93 inspected locations all of which are hotels or resorts. There is not a single ‘cottage’ rated on their programme which begs the question:

“ Is it possible to apply a ratings service to an individual cottage where there are so many subjective variables”.

There’s already a regulatory body that encompasses rental agencies – the Travel Industry Council of Ontario (TICO) however since many small agencies operate without registration, and seem to get away with it, there’s a clear failure here, even with an organization with a government mandate to administer the Ontario Travel Act. If TICO can’t bring together a couple of dozen agencies under one regulatory umbrella, how could the government manage to enforce any legislation that would have to deal with thousands of independent owners?

It is worthwhile considering what TICO does, as it could be a foundation for owner created standards. Their primary focus is to protect the consumer and they do this by insisting on:

Trust Accounting

Brochure accuracy

Clear booking terms and a cancellation policy

A complaints procedure

This seems to be a good starting point but it doesn’t address some of the most glaring issues affecting consumers who rent vacation homes.

In a post I wrote a few weeks ago – Are We Complacent? I commented that:

“The ‘just a cottage’ mentality doesn’t cut it anymore. The days of folks paying $500 for a week of roughing it, have all but gone. Renters are more demanding; they expect minimum standards to include spotlessly clean accommodation, good quality furniture and furnishings (and that includes mattresses and bedding) and up to date equipment in working order. I don’t think this is too much to ask, but the feedback I have had from many people this past summer points to the belief that some owners are still not ‘getting it’.

Everyone who regularly rents a cottage seems to have a story of a bad experience. They comment on poor cleanliness, old and uncomfortable mattresses, shabby furnishings, weedy waterfront described as being great for swimming; backed-up septic systems, and a host of other genuine and valid complaints that could be prevented with more honesty, transparency and accuracy.

Consider this. Most people don’t complain. They may not even tell their friends if they feel they have been overcharged and the place didn’t meet standards. They may just make the most of it, and put it down to bad luck. And of course, it may just stop them from ever renting a vacation home again. And the ones who do complain? I wonder how many of them get a satisfactory response. As one owner said to me recently, “If they don’t like it, that’s their problem. There’s more where they came from and I don’t have any problem renting”!

Alfred Merat of Villas of the World put it very succinctly with this comment,

“….. we need to level the field because any client’s negative experience, no matter with whom, is a detriment to the entire industry, even to those of us with years of success, longevity and excellent reputations”

Given that TICO cannot seem to get the rental agencies registered, it hardly seems likely that a voluntary system will work. But, there is some validity to the argument that we need some sort of standards to regulate the operations of thousands of similar ‘businesses’.

So what might be the answer to the problem of far too many rental units charging highly for sub-standard accommodation and getting away with the old adage, ‘It’s just a cottage.’ Perhaps it will take a group of individual owners to create an ‘owners club’ that will only accept the best into its portals; has a self-generated set of standards; publishes full independent reviews; and complies with a clear mandate to create excellence in the industry. Does anyone think this idea has merit?

My view is that licensing is too cumbersome and bureaucratic a process to have any worthwhile effect. The way forward is to educate consumers into spending their vacation money wisely through providing a way for them to make an informed choice. Responsible independent owners need to take action to raise standards and begin to weed out the bad apples in the barrel. If we made enough of a noise to attract media attention to what goes on in this industry, perhaps a few more people would begin to take notice.