Toronto cracks down on Airbnb

Toronto is making a name for itself as one of the least hospitable places for Airbnb landlords and guests.

The COVID-19 emergency has prompted a number of condo boards worried about spreading the disease to ban residents from listing their units on it or other short-term rental sites, even as bookings dried up in the wake of the global health and economic crisis.

And once the world returns to normal, listing your Toronto property on Airbnb won’t be much easier, thanks to new short-term regulations aimed at solving the city’s housing affordability problems.

Although originally passed back in December 2017, the new rules only recently came into force when they were upheld by a decision of the province’s Local Planning Appeal Tribunal. The tribunal endorsed Toronto City Council’s decision to pass the regulations as representing “good planning in the public interest.”

According to the ruling, Toronto’s rental housing vacancy rate stands at just 1.1 per cent, wellshort of the three-per-cent standard generally accepted as healthy for municipalities of its size. Housing advocates have laid at least part of the blame for the situation in Toronto at the feet of sites like Airbnb, where owners can raise more money through short-term rentals than traditional longer term leases.

The tribunal’s decision noted that Toronto’s short-term rental listings have tripled since 2015 – hitting 21,000 last year, including around 5,000 units used exclusively for short-term rentals and labelled “ghost hotels” by critics.

The appellants – a number of short-term rental operators – claimed that the new rules would have no lasting impact on Toronto’s rental market. Many eliminated “ghost hotels” were more likely to be sold than converted to long-term rentals, and those that did would represent nothing more than a one-time injection of new housing stock that would be quickly absorbed by the market, they argued.

But the precise number of units involved was not of major concern to the tribunal, which found that the bylaws should stand because they would support the city’s policy objectives “first by protecting the housing supply as permanent domiciles for residents, and second, by responding to the availability and affordability issues, if not by returning units to the rental market, at least by preventing further conversions of dwelling units” into short-term rentals.

Under the new rules, Toronto short-term rentals will be limited to homeowners’ and tenants’ principal residence. Whole houses or apartments may be leased out for a maximum of 180 nights per year, but homeowners are also allowed to rent out as many as three bedrooms in a single unit for up to 28 nights at a time.

Any Torontonian operating a short-term rental will have to register with the city beforehand, and pay a four-per-cent municipal accommodation tax on any rental lasting less than 28 nights, as well as an annual registration fee of $50. 

The municipal zoning laws will supersede rules and bylaws of condos whose declarations explicitly allow short-term rentals and impose no restrictions themselves. Many condo boards had already implemented even more restrictive rules after receiving complaints from other owners or experiencing trouble with short-term renters in their
buildings, and they will be able to continue enforcing their own tougher standards or bans.

While I wouldn’t say zoning bylaws regulating short-term rentals are necessarily a bad idea, Toronto’s version seems a little strict to me, and it’s difficult to say whether or not it will actually achieve the city’s desired results of improving housing availability and affordability. 

Things may become clearer following the summer, when the city plans to complete its phased implementation of its bylaw.

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