Anyone who has made condo investments in Liberty Village with the purpose of renting out their units cannot be happy with the increasing regulations that seem to be pouring onto Airbnb and short-term rentals.
As of July 1, The City of Toronto will limit Airbnb in neighborhoods such as Liberty Village, restricting condo owners from short-term rentals and putting limits on where Airbnb is allowed. Today, homeowners or renters offering short-term rentals can only do so in buildings where it is allowed in addition to the requirement of it being their primary residence only.
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Much of the ongoing debate has been on how to enforce the regulation of Airbnb rentals. Though the City has promised to fine and charge those who break the law, it may be difficult to identify who is.
Among the proposals on how to better regulate short-term rentals in Liberty Village and other neighborhoods, the City has recommended a 4 percent tax. The argument for this tax is that it would help hotels who have struggled in the face of Airbnb renting. There are some organizations arguing for an even higher tax, de-incentivizing those who are challenging the short-term rental regulations and to discourage consumers from doing business with companies such as Airbnb.
With the rise of condo developments in Liberty Village throughout the past two decades, many bought units as investment properties with the specific intention of renting them out. As Airbnb’s reputation grew seemingly at the same time, the neighborhood ended up being a highly popular destination for users of the platform. After all, beyond the extraordinary charm of Liberty Village, you have Queen Street West not far up north, the entertainment district of King Street West to the east, and there’s always something going on nearby across almost any category of interest.
Needless to say, landlords and tenants who continue to use Airbnb in Liberty Village are understandably disappointed and perhaps even frustrated at hearing the City’s ongoing demands to limit and eliminate the platform from the city.
The disappointment that some investors feel in Liberty Village and the surrounding area has to do with having choice taken away from them on how to use the properties that they buy and own. In a perfect world, one should be able to use their own property as they see fit provided the use is lawful and respectful towards neighbours. That said, due to the effects that Airbnb has had on Toronto real estate and rentals – or at least, the perceived effects that are argued by many analysts who have examined the issue – the platform is caught between a rock and a hard place. At this point, the future of short-term rentals in Toronto is in jeopardy.
Yes, it can be argued that the City stepping in to regulate Airbnb was required. Airbnb is not the ‘room for rent’ platform that it paints itself out to be. Approximately 80 percent of Airbnb’s business in Toronto, prior to the regulations, came from semi-detached or detached whole home rentals. Also, approximately 50 percent of the Toronto listings on Airbnb, prior to the regulations, came from investors with multiple rentals available on the platform.
As pure as Airbnb’s intentions may have been initially – to provide an easy platform for people to rent out a room in their home and make some extra money – to many investors, it became a business. Evidently, to many Toronto residents and members of City government, that’s unacceptable.
As Toronto condos such as Neptune condominiums have negotiated deals with Airbnb and company executives have repeatedly communicated to the City their willingness to accommodate reasonable regulations, hope is not lost entirely on having Airbnb in Liberty Village.
Though Airbnb continues to rent out throughout Liberty Village and Toronto, its growth has been stunted. Today’s Liberty Village listings range in price from $70/night to $100/night on average, depending on the size of accommodations one hopes to rent. As an investor in condo properties, using short-term rentals to pay the bills may be difficult waters to navigate and, furthermore, buying Liberty Village condos with short-term renting in mind may leave you facing unexpected restrictions months or years down the line. All in all, short-term rentals are not recommended and condo investors should be prepared to seek out long-term tenants for steady rental income. Otherwise, attempting to get around new City restrictions could prove to be harder than you think.