Toronto City Council passes dramatic new regulations on short term rentals
- New rules apply to rentals shorter than 28 days
- Platforms such as Airbnb now required to register with city and pay a per night rental tax
- Owners also required to register and pay $50 registration fee
- One host, one property — multiple property listings by a host not permitted
- Secondary suites, such as basement apartments may only be offered overnight by a long-term tenant, not the owner
- Coming into effect on June 1st, 2018, the new laws may reduce the overnight rental market by 100s or even 1000s of units
By Tim Chang, for TorontoVIPCondo.ca
March 21, 2018
Property owners and landlords in Toronto are still digesting the sweeping new regulations passed by Toronto City Council on December 7, 2017. Meant to increase the supply of long-term rental units, Toronto followed the lead of Montreal in regulating short-term rentals through online platforms such as Airbnb. Until these regulations, short-term rentals were a grey area, unregulated and not legally allowed in Toronto, but still quite indiscreet and growing rapidly over the past couple years.
Most notable among the changes is the one host, one property rule. Short-term rentals must now be the principal residence of the owner or tenant. The increasing prevalence of multi-unit hosts will come to abrupt end as commercial short-term rental enterprises lose the legal footing to operate in Toronto.
The following public notice is posted to the City of Toronto website summarizing the changes.
Residents and property owners are renting out rooms or entire units for short periods (less than 28 days) in growing numbers across the city, facilitated by the rise of online platforms such as AirBnB, VRBO, etc. Currently, short-term rentals are not permitted in Toronto.
On December 7, 2017, City Council approved the regulation of short-term rentals in Toronto.
Here are the key points of the new rules, which take effect June 1, 2018:
- short-term rentals are permitted across the city in all housing types
- people can host short-term rentals in their principal residence only – both homeowners and tenants can participate
- people can rent up to three bedrooms or entire residence
- people who live in secondary suites can also participate, as long as the secondary suite is their principal residence
- an entire home can be rented as a short-term rental if owner/tenant is away – to a maximum of 180 nights per year
- people who rent their homes short term must register with the City and pay $50
- companies such as Airbnb must become licensed and pay a fee of $5,000, plus $1/night booked through the platform
How will Toronto be able to enforce these regulations?
First, implementation of the regulations will likely be enforced by short-term rental platform, not the City. In Amsterdam, Airbnb locks an owner from renting their property after reaching a 60 day threshold. In addition, Toronto owners will be required to register with the City and likely required to post their registration number in Airbnb ads. Although the onus would be on Airbnb to implement the restrictions, the City will be able to verify and follow up with a paper trail provided by Airbnb if enforcement and fines are necessary.
What do these regulations mean for owners of one or more short-term rental investment units?
A June 2017 study by the city estimated 3,200 short-term units being rented that were not the principal residence of the host. Another study by McGill University in August 2017 estimated a higher number at 4,890. These findings indicate that close to 5,000 Toronto rental units will immediately be affected by the regulations.
The owners of multiple short-term rental units, some numbering in the hundreds, will need to rent to long-term tenants or sell their properties, as they will otherwise be in contravention of the regulations. This could mean thousands of Toronto rental units coming available for sale or rent come June 1st, 2018.
If you are currently a multi-unit short-term rental owner, consider looking into long-term rentals before the flood of rentals hit the market. If you were considering selling some of your units, be strategic and avoid the rush of sales by selling well before or well after June 1st, 2018.
Owners have yet to see the effect of these changes, but one thing is certain, as of June 1st, 2018 the short-term rental market will be very different in Toronto.