Kelowna’s STR Market Just Changed

Kelowna Short-Term Rental Buildings: What the STR Exemption Means for Buyers, Sellers and Investors

Kelowna’s short-term rental market just changed again.

Starting June 1, 2026, owners in 16 specific strata buildings in Kelowna will be allowed to operate short-term rentals as a principal use.

That means, in those specific buildings, owners will not need to live in the unit full time to run it as a short-term rental.

This is a big deal.

But it is also important to be clear: this does not mean Airbnb is back everywhere in Kelowna.

This change applies only to a limited group of approved buildings. For buyers, sellers, and investors, that limited supply is exactly why this matters.

For the last few years, many investors have stepped away from the Kelowna real estate market. Between higher mortgage rates, rising strata fees, tighter rental rules, and short-term rental restrictions, the math became harder.

Now, for a small number of buildings, the math may be changing again.

Not for every unit.
Not for every buyer.
Not for every investor.

But for the right property, in the right building, at the right price, this could create one of the more interesting investment windows we have seen in Kelowna in a while.

Quick Answer: Can You Run a Short-Term Rental in Kelowna?

In most cases, short-term rentals in Kelowna are still restricted.

However, 16 specific strata buildings in Kelowna have been approved to allow short-term rentals as a principal use starting June 1, 2026.

Before buying, owners and investors should confirm:

• The property is in one of the approved buildings
• The strata bylaws allow short-term rentals
• The City of Kelowna licensing rules are satisfied
• Insurance and financing are available
• The numbers still work after mortgage payments, strata fees, taxes, utilities, and management costs

This is not a simple “buy anything and Airbnb it” situation.

You still need to run the numbers properly.

Why This Matters for the Kelowna Real Estate Market

Kelowna has always had strong demand from tourists, lifestyle buyers, retirees, students, investors, and people relocating from other parts of Canada.

That demand never disappeared.

The issue was that the numbers stopped making sense for many investors.

Over the last few years, investors were hit from several sides at once:

• Higher interest rates
• Higher purchase prices
• Higher insurance costs
• Higher strata fees
• Higher maintenance costs
• Long-term rent caps
• Stronger tenant protections
• Short-term rental restrictions

That combination made many investment properties much harder to justify.

A property could still look good on paper, but once you added the full monthly carry, the profit often disappeared.

That is why this short-term rental exemption matters.

It gives a limited group of owners and buyers access to an income stream that may better match Kelowna’s tourism-driven market.

But again, this only works if the numbers work.

Why Investors Pulled Back From Kelowna

The short-term rental ban got most of the attention, but it was not the only reason investors left the market.

In my opinion, there were three big reasons.

1. Long-Term Rent Caps Could Not Keep Up With Real Costs

For many small landlords, the biggest issue was simple: costs kept rising faster than rents.

Over the last several years, property owners saw increases in:

• Mortgage payments
• Strata fees
• Property taxes
• Insurance
• Repairs
• Maintenance
• Utilities
• Vacancy risk

At the same time, annual rent increases were capped.

You can make the argument that tenants needed more protection during a very expensive period. That is fair.

But from an investor’s point of view, the rental math became harder.

If your costs rise quickly, but your income is capped, the gap has to come from somewhere.

Usually, it comes out of the owner’s pocket.

That is why many investors started looking at short-term rentals in the first place. Short-term rental income could move with market demand, tourism seasons, and nightly rates in a way that long-term rents could not.

2. Tenant Rules Became Harder for Small Landlords

The second issue was process.

Over time, tenant rights in British Columbia became stronger.

Again, there are good reasons for some of those changes. Housing is expensive, and tenants need stability.

But for small landlords with one or two properties, the system started to feel harder to manage.

More rules.
More notice periods.
More risk.
More process.
Less flexibility.

For some investors, it was not just about the money anymore. It was about whether owning a rental property still felt worth the stress.

That pushed some investors away from long-term rentals and toward short-term rental models.

3. Then the Short-Term Rental Ban Hit

For many investors, short-term rentals were the one income stream that still made the numbers work.

Then that door closed.

Owners were left with a few choices:

1. Sell into a slower market
2. Convert to long-term rental and accept weaker cash flow
3. Hold the property and absorb the costs
4. Wait and hope the rules changed again

None of those options were ideal.

That is why many of these buildings saw values drop and sales volume slow.

Investors did not just stop buying.
They stopped trading.

What Happened to Values in Kelowna’s STR Buildings?

This is where things get interesting.

When you look at several of the buildings with enough sales history, many are still trading well below their previous market peaks.

Here are some examples based on the data I reviewed:

That does not mean every property is a deal.

But it does show how much this part of the market was hit.

Several of these buildings are down roughly 18% to 36% from their peak pricing.

That is a major reset.

For buyers, that creates a very different conversation than we had in 2021 or 2022.

Back then, buyers were often paying peak prices with low interest rates and strong short-term rental assumptions.

Today, the prices are lower, but the carrying costs are higher.

So the question is not, “Are these buildings cheap?”

The better question is:

At today’s price, with today’s mortgage rates, strata fees, and short-term rental rules, does the investment make sense?

That is the only question that matters.

Current Carrying Costs Matter More Than the Purchase Price

A lot of buyers focus too much on the purchase price.

That is a mistake.

With investment condos, the monthly carrying cost is what really matters.

You need to look at:

• Mortgage payment
• Strata fee
• Property tax
• Insurance
• Utilities
• Repairs
• Cleaning
• Management fees
• Licensing costs
• Vacancy
• Income taxes

A cheaper unit is not always the better investment.

For example, a lower-priced condo with a high strata fee may carry worse than a more expensive unit with a lower strata fee.

That is why buyers need to compare the full monthly cost, not just the list price.

Based on the active inventory reviewed, some buildings had much lower monthly carrying costs than others.

For example:

• Brooklyn had one of the lower total monthly carries because of its lower strata fees.
• Pinnacle Point looked interesting because of its lower entry price, even with higher strata fees.
• Playa del Sol had a higher strata fee, but buyers also need to look at what utilities are included.
• Discovery Bay and Granite at McKinley had higher total carrying costs, meaning they may need stronger rental income to justify the purchase.

The point is simple:

The building matters. The unit matters. The strata fee matters. The numbers matter.

What This Means for Buyers

For buyers, this could be an opportunity, but it is not a free pass.

The window for huge discounts may already be closing.

Many of these properties have already dropped significantly from their peak values. Sellers who have held through the downturn may now feel like they finally have some good news.

That means buyers should not assume every seller is desperate.

Instead, buyers should focus on the numbers.

Before buying in one of Kelowna’s short-term rental buildings, ask:

• Is this one of the approved buildings?
• What does the strata allow?
• What is the monthly strata fee?
• What utilities are included?
• What are similar units renting for nightly?
• What is a realistic occupancy rate?
• What are the cleaning and management costs?
• What is the backup plan if the rules change again?
• Would this property still make sense as a long-term rental?
• Could I afford to hold it if revenue is lower than expected?

That last question is important.

Short-term rental income can be strong, but it is not guaranteed.

Tourism changes.
Rules change.
Competition changes.
Insurance changes.
Strata bylaws can change.

A good investment needs more than a good headline.

What This Means for Sellers

If you own in one of the 16 approved short-term rental buildings, your property story may have changed.

For the last couple of years, many sellers in these buildings were fighting an uphill battle.

Buyers were cautious.
Investors were nervous.
Rules were unclear.
Financing costs were higher.
Income potential was weaker.

Now, the conversation is different.

You may be able to market your property as part of a limited group of STR-eligible buildings in Kelowna.

That gives you a stronger story.

But it does not mean you can price the property like it is 2021 again.

Buyers are still careful. They are running the math. They are looking at mortgage payments, strata fees, insurance, taxes, and income potential.

The best seller strategy is not hype.

The best strategy is clarity.

Show buyers:

• Why the building matters
• What makes the unit attractive
• What the monthly costs are
• What the short-term rental opportunity may be
• How the property compares to other active listings
• How far values have reset from the peak

The sellers who win will be the ones who make the buyer’s decision easier.

What This Means for Kelowna Investors

For investors, this is not about buying because short-term rentals are “back.”

That is too simple.

The better way to look at it is this:

Kelowna now has a limited supply of STR-eligible buildings in a market that still has strong tourism demand.

That limited supply could matter.

If demand increases and supply stays capped, the best-located and best-priced units may get more attention.

But not every building is equal.

An investor should look at:

• Purchase price
• Strata fee
• Unit size
• Bedroom count
• Location
• Walkability
• Parking
• Lake access
• Building amenities
• Management rules
• Rental history
• Resale demand
• Future policy risk

Some properties may be strong investments.

Some may only look good until you run the full numbers.

And some may still not work at all.

That is the honest answer.

What This Means for Developers and Home Builders in Kelowna

This short-term rental change also tells a bigger story about Kelowna real estate.

Investors still want Kelowna.

The issue is not demand.

The issue is whether the numbers work.

That same lesson applies to developers, builders, and landowners looking at infill multifamily projects in Kelowna.

Between construction costs, financing costs, zoning rules, rental rules, and buyer affordability, every project needs to be studied carefully.

It is not enough to say, “Kelowna needs more housing.”

That is true.

But the real question is:

What type of housing works in this location, at this land price, with today’s construction costs and today’s buyer or renter demand?

For builders and developers, the opportunity may include:

• Small-scale multifamily
• MF1 redevelopment sites
• Townhome projects
• Infill rental housing
• Purpose-built rentals
• Land assemblies
• Missing-middle housing
• CMHC MLI Select rental projects
• Stratified multifamily projects
• Gentle density near schools, transit, shops, and employment areas

The lesson from the short-term rental market is that policy can change value very quickly.

One rule change can hurt values.
Another rule change can create opportunity.

That is why developers and landowners need to understand zoning, demand, buyer profiles, rental math, and resale strategy before making a move.

Kelowna Is Not One Real Estate Market

This is the biggest takeaway.

Kelowna is not one simple real estate market.

It is a group of smaller markets.

Detached homes are different from condos.
Condos are different from townhomes.
STR buildings are different from standard strata buildings.
MF1 development sites are different from regular single-family homes.
Waterfront is different from suburban family housing.
Downtown investor condos are different from Lower Mission lifestyle condos.

That is why broad headlines can be misleading.

A headline might say the market is slow.

But one specific building, street, zoning type, or price range may be seeing very different activity.

That is where local knowledge matters.

If you are buying, selling, investing, or developing in Kelowna, the opportunity is usually not found in the headline.

It is found in the details.

Buyer Checklist: Before You Buy a Kelowna Short-Term Rental Property

Before buying in one of Kelowna’s approved STR buildings, make sure you review:

• Building eligibility
• Strata bylaws
• City licensing requirements
• Insurance availability
• Financing options
• Monthly strata fees
• Utility inclusions
• Property tax
• Rental management costs
• Cleaning costs
• Nightly rate assumptions
• Occupancy assumptions
• Backup long-term rental value
• Resale demand
• Future rule-change risk

Do not buy only because a building is STR eligible.

Buy because the full investment makes sense.

Seller Checklist: If You Own in One of These Buildings

If you are thinking about selling, focus your marketing on:

• STR eligibility
• Limited supply
• Updated policy change
• Income potential
• Building amenities
• Location
• Monthly carrying costs
• Recent comparable sales
• Buyer demand
• Clear investment math

The right buyer does not just need pretty photos.

They need confidence.

FAQ: Kelowna Short-Term Rental Buildings

How many buildings in Kelowna allow short-term rentals as a principal use?

There are 16 specific strata buildings in Kelowna where short-term rentals will be allowed as a principal use starting June 1, 2026.

Does this mean Airbnb is allowed everywhere in Kelowna again?

No. This change only applies to specific approved buildings. It does not mean short-term rentals are allowed in every condo, townhouse, or detached home in Kelowna.

Are Kelowna short-term rental condos a good investment?

Some may be, but not all. Buyers need to look at purchase price, mortgage payments, strata fees, taxes, insurance, management costs, occupancy, nightly rates, and future resale value.

What should sellers do if they own in one of the approved buildings?

Sellers should update their marketing strategy. The property may now have a stronger investment story, but pricing still needs to be based on current market conditions and buyer expectations.

What is the biggest mistake buyers make with STR condos?

The biggest mistake is focusing only on the purchase price. Strata fees, financing costs, taxes, insurance, utilities, and management costs can completely change the investment.

How does this affect Kelowna builders and developers?

It shows how quickly policy can affect real estate values. Builders and developers need to study zoning, demand, financing, construction costs, and exit strategy before moving forward with infill multifamily projects.

Final Thoughts

This short-term rental exemption is not a magic fix for the Kelowna real estate market.

But it is meaningful.

For owners in the approved buildings, it may improve the resale story.

For buyers, it may create a limited investment opportunity.

For investors, it brings back a form of income flexibility that had been removed.

For developers and builders, it is another reminder that policy, zoning, and market demand can shift value quickly.

The key is not to chase the headline.

The key is to understand the numbers.

If you are thinking about buying, selling, investing, or developing in Kelowna, make sure you are looking at the property from every angle.

The opportunity is not always obvious.

But in this market, the people who understand the details first usually have the advantage.

I’m tracking the approved buildings, active listings, recent sales, strata fees, days on market, and monthly carrying costs.

If you are thinking about buying or selling in one of these buildings, I would be happy to walk you through the numbers.

Mark Coons Personal Real Estate Corporation, BBA + CE
Team Lead, Selling Okanagan Group
REALTOR® with eXp Realty Kelowna
Relocated to Kelowna in 2018
Phone: 778-946-6454
Email: [email protected]