If you are, or planning to be, a Landlord in the City of Waterloo, you need to have a working understanding of the city's rental bylaw.   The City of Waterloo takes tenant safety and neighborhood standards seriously, enforcing strict rules under what is called the Rental Housing Licensing By-law (By-law 2011-047).

The following is an overview of what you need to know, understand, and do to operate a legally compliant rental property in Waterloo.  At the end of this post I will include links to the city's online resources and provide contact information should you have any questions or need further clarification.

Do You Actually Need a Licence?

The golden rule in Waterloo is simple: No person shall carry on a residential rental business or collect rent without a licence. If you rent out a unit for more than 30 days (long-term) or for 30 days or less (short-term), you generally need a licence.

However, there is a highly valuable exemption that multi-family investors need to know about. A property is entirely exempt from licensing if it meets the legal definition of an "Apartment Building".

To qualify for this exemption, the building must have:

• Four (4) or more dwelling units.
• Units that are horizontally separated.
• Access to a common interior corridor system with a common exit at grade level.

Investor Takeaway: If you purchase a purpose-built 4-plex with a shared interior hallway, you bypass the licensing process. If you buy a 4-plex where each unit has a direct exterior door, it is not exempt and will require a Class "Z" licence.

Know Your Licence Classes

If your property is not exempt, you must apply for the correct class of licence. A property can only hold one class of licence at a time (with very few exceptions). Here are the primary categories for investors:

• Class A (Standard Investment Properties): This is the most common licence for non-owner-occupied properties, including single-detached, semis, townhouses, and basement units. Crucial limitation: A Class A licence strictly caps the maximum number of bedrooms at four (4).
• Class B (Owner-Occupied & Short-Term): If you live in the home and rent out rooms, a basement, or operate a short-term rental (like an Airbnb), you need a Class B licence. This is also strictly capped at four (4) bedrooms for rent. Note: Short-term rentals are limited to 275 rental days per calendar year.  Click here for link to short term rentals.
• Class C (Large Rentals): If you intend to rent out five (5) or more bedrooms, you must upgrade to a Class C licence. This classifies your property as a lodging/boarding house. It triggers rigorous Fire and Building Code compliance, mandates that every bedroom door be capable of locking, and limits the home to a maximum of two bathrooms and one kitchen.

Gathering Your Application Paperwork and Documents

Applying for a licence is a a bit of a process and requires a fair bit of legwork prior to the application.   The city requires comprehensive documentation to ensure your property is safe and properly managed. To get your licence, you must submit:

• Professional Safety Inspections: You need a certificate from a certified HVAC technician confirming the heating system works, and an Electrical Safety Authority (ESA) inspection completed within the last six months.                                                                                           
• Floor & Parking Plans: You must provide a floor plan detailing the dimensions of all rooms and explicitly labeling the bedrooms, alongside a parking plan outlining driveway spaces.
• Police Record Checks: This is a major hurdle for unprepared buyers. A police check is required for all new applications and every five years upon renewal. If you hold your property in a corporation, a police check is required for every director, officer, and shareholder holding more than 30% of the shares.
• Insurance: You must prove you hold a liability limit of no less than $2,000,000 per occurrence, and the policy must specifically identify that a residential rental business is operating on the property.
• Local Contact: If you are an absentee landlord who does not reside within the Regional Municipality of Waterloo, you must designate a local agent or representative to manage issues.

Renewals and Property Maintenance

Licences are not a "set it and forget it" task. They must be renewed annually. Depending on your property's street name, your renewal date will be March 31, August 31, or November 30.  Click here to get link to "find your renewal date".

As part of your application, you must agree to a property maintenance plan. This means you are legally required to manage refuse, recycling, and identify where snow will be stored during the winter.

The Severe Cost of Non-Compliance

I always advise my clients: do not try to fly under the radar. Operating without a licence, or packing more bedrooms into a house than your licence class allows, is designated as a "continuing offence".

The financial penalties are aggressive. Individuals face a maximum fine of 50,000. If the offence continues, the city can levy daily fines of up to $10,000. Most drastically, if convicted of knowingly operating an illegal rental, the courts can order your property closed to any use for up to two years.

So we are clear, that is (potentially) 24 months of not collecting rent but left paying bills.  The authority to shut down a rental property for up to two years is specifically outlined in Sections 13.5 and 13.6 of the City of Waterloo's Rental Housing Licensing By-Law (By-law 2011-047).

• Section 13.5 (Operating Without a Licence): Pursuant to section 447 of the Municipal Act, 2001, if an Owner is convicted of knowingly operating a residential rental business on a premises without the required licence, the Court may order that the premises (or part of it) be closed to any use for a period not exceeding two (2) years.
• Section 13.6 (Other Contraventions): If a person is convicted of other contraventions of this by-law, and the Court determines that the Owner or Tenant knew (or ought to have known) about the illegal conduct or a pattern of similar conduct, the Court can also order the premises closed to any use for up to two (2) years

(Disclaimer: This video is for informational purposes only and does not constitute legal advice. Please consult the City of Waterloo Rental Housing Licensing By-law 2011-047 and Zoning By-law 2018-050 for official regulations.)

Useful Links & Resources:

City of Waterloo – Rental housing Licensing Bylaw: https://www.waterloo.ca/bylaws-and-enforcement/bylaw-directory/rental-housing-licensing-bylaw/

City of Waterloo – Bylaw Contact: 519-747-8785 or [email protected] 

Let's Build Your Tailored Investment Strategy

Understanding the Waterloo Rental Housing Licensing By-law is just the first step in protecting your wealth. Whether you are a buyer looking for a compliant multi-family asset or an investor looking to sell a licensed property for maximum value, you need a professional who prioritizes transparency and data-backed strategies.

I don't just sell real estate; I help you build a profitable, compliant portfolio.

Ready to take the next step? Let’s discuss your unique investment needs. Get in touch today to leverage 17 years of local expertise.

Terry Riddoch Phone: c. (519) 591-1725 | o. (226) 741-3895 Email: [email protected] Website: www.terryriddoch.ca