Muskoka Lakes Short-Term Rental Licence: 2026 Owner's Guide
Last updated October 2026
If you own a cottage in the Township of Muskoka Lakes, the area around Lake Rosseau, Lake Joseph and Lake Muskoka, and you rent it out for short stays, you need a municipal licence. The rules come from the Township's Short Term Rental Accommodation Licensing By-law 2025-049, and some of the most important parts, especially the summer rental limits on waterfront properties, have changed how owners plan their season. This guide sets out what the by-law requires, what it costs, and how to stay in good standing.
Key facts
By-law: Short Term Rental Accommodation Licensing By-law 2025-049
Who needs a licence: anyone renting a dwelling for 28 consecutive days or less
Licence first: your licence must be in hand before any listing or booking. Until it is issued, rent only for 30 days or more (monthly stays).
Annual township fee: $1,000 in Waterfront or R4 zones; $500 in all other zones
Insurance: at least $2 million liability per occurrence that identifies the short-term rental use
Building permits: no licence until all building permits on the property are closed
No minimum ownership period: the by-law has no rule that you must own the property for a set time before applying
Occupancy: 2 people per bedroom, unless a septic system designed for more allows a higher limit
Demerits: 15 points within 3 years means suspension
Advertising: your licence number must appear in every ad
Summer limits (Waterfront, R4 and Waterbody Open Space zones): a 7-night break in each of June, July and August, and one rental group per 6 nights from Victoria Day to Labour Day. These took effect May 1, 2026.
Who needs a Muskoka Lakes STR licence?
The Township defines a short-term rental accommodation (STRA) as a dwelling used for rental stays of 28 consecutive calendar days or less, at any point in the year. Hotels, motels, B&Bs, private camps, tent and trailer parks and rooming houses are excluded because the Zoning By-law covers them separately.
If you list your cottage on Airbnb, Vrbo, a management company's site or even a Facebook group for stays of four weeks or less, you need a licence, and it must be in hand before any listing goes up or any booking is taken. Advertising without a licence is itself an offence. Until your licence is issued, start with monthly rentals of 30 days or more, which fall outside the 28-day licensing threshold. Only one licence is issued per property, but every habitable building on the lot can be rented under it, including bunkies and second-storey boathouses, as long as it goes to one rental group at a time.
What does a licence cost?
The licence fee is paid to the Township. According to the Township's operator resources page, the annual fee depends on your zoning:
Waterfront or R4 (Community Waterfront Residential) zones: $1,000 per year
All other zones: $500 per year
Not sure which zone you are in? The Township suggests checking on the Muskoka GeoHub. Licences are renewed every year, and you will get a Notice of Renewal by email 60 days before yours expires.
Occupancy limits and septic
The standard limit is two people per bedroom. A higher limit can be approved if your septic system was designed and built under the Ontario Building Code for more occupants. The Township makes that call. Septic occupancy information is usually on a recent building permit or available from the Building Department. Children aged two and under are not counted. If your cottage sleeps more people on pull-outs and bunk beds than your bedroom count allows, look at this before you take bookings.
Summer rental limits on Waterfront, R4 and Waterbody Open Space properties
This is the part that changes how you price and plan. The Township's STRA presentation says the rental restrictions came into effect on May 1, 2026. They apply only to properties zoned Waterfront Residential, Community Residential (R4) or Waterbody Open Space:
Summer monthly break
In June, July and August you must take at least seven consecutive nights off each month. The break cannot straddle two months.
Summer rental frequency
From the Friday before Victoria Day to the Tuesday after Labour Day, only one rental group is allowed per six-consecutive-night period. Stays longer than six nights don't need a gap between groups, but the monthly breaks still apply.
You and your family or friends can still use the cottage when it isn't rented. Properties in other zones don't have these two rules, but they still have to follow the occupancy limits.
In practice, waterfront owners now need to plan their summer around weekly or longer stays and set nightly rates that make up for the required time off.
Demerit points, penalties and advertising
Offences under the by-law carry demerit points, which expire three years after they are issued. At 15 points within three years, the licence is suspended for a period the Township sets. Point values are listed in Schedule "B" of the by-law. The Township also states that advertising or operating without a licence carries a penalty of $5,000 per day.
Licensed operators must:
Show the licence number on all advertisements and listings
Post the licence somewhere easy to see inside the cottage
Keep the Renter's Information Package somewhere guests can find it
How to apply
Pay any outstanding fees or fines on the property and complete the Township's Pre-Application Checklist. Incomplete applications are not reviewed.
Gather proof of ownership, such as a tax bill, deed, LRO abstract or MPAC notice. There is no minimum period you must own the property before applying. (The one-year ownership rule you may have heard about is the Town of Huntsville's, not Muskoka Lakes'.)
Get a certificate of insurance with at least $2,000,000 liability per occurrence for property damage and bodily injury that identifies that a short-term rental is operated on the property.
Take photos of the front of the cottage and the driveway entrance with the blue 911 sign clearly visible, plus the private road entrance if you have one.
Close any open building permits. The Township will not issue a licence until every building permit on the property is closed with an occupancy certificate. Battery smoke and CO alarms may be acceptable in buildings that predate hardwired requirements.
Expect the Building, By-law, Fire and Septic departments to review your file. There is no mandatory inspection, but the Township can require one at your cost if concerns come up.
At renewal, you'll submit a Licensee Acknowledgement Form, Renter's Code of Conduct, Responsible Person Declaration and current proof of insurance, even if nothing has changed.
Curious what your cottage could earn under the new rules? Call 705-996-6769 to talk with our local team at Homeseeker Vacation Homes, or see how we manage Muskoka Lakes cottages.
Frequently asked questions
Do I need a licence if I only rent my Muskoka Lakes cottage a few weeks a year?
Yes. The by-law applies to any rental of 28 consecutive days or less, however often you rent. It also applies to advertising, so a listing without a licence can lead to penalties.
How much is a short-term rental licence in Muskoka Lakes?
$1,000 per year for properties in Waterfront or R4 zones and $500 per year for all other zones, according to the Township.
What are the summer rules for waterfront cottages?
In Waterfront, R4 and Waterbody Open Space zones, you must take at least seven consecutive nights off in each of June, July and August. From the Friday before Victoria Day to the Tuesday after Labour Day, only one rental group is allowed per six-consecutive-night period.
Do I have to own my Muskoka Lakes cottage for a year before I can get a licence?
No. By-law 2025-049 has no minimum ownership period. You need proof of ownership and a complete application, and you can rent short-term once your licence is issued. The one-year ownership rule belongs to the Town of Huntsville.
Can I rent my cottage while my licence application is being processed?
Not short-term. Your licence must be in hand before any short-term listing or booking. In the meantime, you can rent for 30 days or more (monthly stays), since the by-law only covers stays of 28 consecutive days or less.
Can I lose my licence?
Yes. Demerit points build up for offences, and 15 points within three years leads to suspension. Operating or advertising without a licence carries a penalty of $5,000 per day.
This article is general information, not legal or tax advice. By-laws and fees change, so always confirm current requirements with the Township of Muskoka Lakes before you apply or advertise.
