Waterloo Airbnb Rules Changing July 2026: Apartments Losing STR Exemption

If you’re running an Airbnb in Waterloo, Ontario, major changes are coming that could affect your rental business. Apartment units, currently exempt from short-term rental regulations, will likely lose that exemption in July 2026.

We recently spoke with a City of Waterloo representative who confirmed that bylaw changes are expected mid-2026 that will bring apartments under the same regulatory framework as low-rise residential units.

Here’s what Waterloo Airbnb hosts need to know.

Current Waterloo STR Rules (2025-2026)

Since January 2025, Waterloo has regulated short-term rentals in low-rise residential buildings under By-law 2024-065. The current rules include:

• License required for all STRs in low-rise units
• Principal residence rule - you can only short-term rent your primary home
• Safety inspections required before licensing
• Registration with the city mandatory

However, apartments in high-rise buildings have been exempt from these rules. This exemption has allowed condo and apartment owners to operate Airbnbs without needing to meet the principal residence requirement or obtain a license.

That’s about to change.

What’s Changing in July 2026

Based on our conversation with the City of Waterloo, here’s what apartment hosts should expect:

Apartments Will Require Licensing

High-rise apartment and condo units will need to register with the city and obtain a short-term rental license, just like low-rise units currently do.

Principal Residence Rule Likely to Apply

The most significant change: apartment STRs will likely need to be your principal residence. This means:

• The unit must be your primary home where you live most of the year
• You’ll need to provide proof of residency (driver’s license, tax returns, etc.)
• Investment properties likely won’t qualify for short-term rental licensing

Day Limits May Apply

While exact details are still being finalized, apartment hosts may face the same restrictions as low-rise units, which could include limits on how many nights per year you can rent.

Registration and Safety Requirements

Expect requirements for:

• Fire safety compliance
• Building code standards
• Smoke and CO detector verification
• Possibly liability insurance requirements

Why Is Waterloo Making These Changes?

Waterloo’s STR regulations are part of a broader effort across Ontario to address housing affordability concerns. The city has approximately 500 active short-term rentals, and officials expect around 100 of these to convert to long-term housing once regulations tighten.

The apartment exemption created an uneven playing field where condo investors could operate STRs freely while homeowners in low-rise buildings faced restrictions. Extending regulations to apartments aims to:

1. Level the playing field between different housing types
2. Protect long-term rental housing stock in a tight market
3. Ensure safety standards across all STR properties
4. Create accountability through registration and licensing

What Waterloo Apartment Hosts Should Do Now

1. Don’t Panic, But Do Plan

You have until July 2026 to prepare. Use this time wisely to evaluate your options and make informed decisions about your property.

2. Determine If You Qualify Under New Rules

Ask yourself:

• Is this apartment your principal residence?
• Do you live here most of the year?
• Can you provide proof of residency?

If you answer “no” to these questions, your ability to continue short-term renting may be limited once the new rules take effect.

3. Consider Mid-Term Rentals

Rentals of 30 days or more are typically exempt from short-term rental regulations in Ontario. If your apartment is an investment property, pivoting to mid-term rentals (furnished monthly rentals) could be a viable alternative.

Mid-term rentals in Waterloo have strong demand from:

• Tech workers on assignment at local startups
• University of Waterloo visiting faculty and researchers
• Wilfrid Laurier students and their families
• Corporate relocations to the tech corridor

4. Maximize Revenue While You Can

If you’re operating an investment property STR, consider optimizing your listing now to maximize revenue before regulations change. This might mean:

• Professional photography updates
• Listing optimization for better search ranking
• Dynamic pricing to capture peak demand periods
• Building up reviews and Superhost status

5. Stay Informed

The exact details of the July 2026 changes are still being finalized. Monitor the City of Waterloo’s rental licensing page for updates.

Impact on Investment Properties

Let’s be direct: if you own an investment property (not your principal residence) in a Waterloo apartment building, your ability to Airbnb it will likely end in July 2026.

Your options include:

1. Convert to mid-term rentals (30+ day stays) which are generally exempt
2. Convert to traditional long-term rental with a standard lease
3. Sell the property if short-term rental income was essential to your investment thesis

This is similar to what happened in Toronto, Mississauga, and other Ontario cities that implemented principal residence requirements. Investment property STRs largely disappeared from the market.

The Bigger Picture: Ontario’s STR Landscape

Waterloo’s changes are part of a province-wide trend. Nearly every major Ontario city now requires or is implementing:

• Principal residence requirements
• STR licensing/registration
• Safety inspections
• Some form of night limits or restrictions

Cities like Toronto, Mississauga, Brampton, Hamilton, and Kitchener all have similar rules in place. Waterloo is simply closing a loophole that allowed apartments to operate differently.

How We Can Help

At Nurture, we help Waterloo property owners navigate these regulatory changes. Whether you’re:

• Continuing to STR your principal residence and need licensing support
• Pivoting to mid-term rentals and need help attracting 30+ day guests
• Maximizing revenue in the time remaining before new rules take effect

We can help you adapt your strategy to the changing regulatory environment.

Key Takeaways

1. Waterloo apartments will likely lose their STR exemption in July 2026
2. Principal residence requirements will probably apply to all units
3. Investment property STRs face significant restrictions
4. Mid-term rentals (30+ days) remain a viable alternative
5. Start planning now - don’t wait until July 2026

The short-term rental landscape in Ontario continues to evolve. Hosts who stay informed and adapt their strategies will be best positioned for success.

Have questions about Waterloo’s upcoming STR changes? Contact us for a free consultation on your options.