New rules regulating Airbnb and other short-term rentals in Toronto have been approved. Some speculate that the city’s housing/condo market could undergo massive changes in an attempt to bring back thousands of units to Toronto’s longer-term rental market. After two years of anticipation, the provincial tribunal ruled out the matter to side with the city of Toronto while rejecting an appeal by a group of landlords whose goal was to block Airbnb regulations in Toronto.
The city council originally approved zoning bylaw amendments in December 2017 which were expected to take effect in June 2018. However, The Local Planning Appeal Tribunal (LPAT) challenged the rules and were forced to be put on hold, and it wasn’t until Monday, November 2019, that the province tribunal ruled in favour of the zoning bylaw amendment.
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Liberty Village’s condo stock was once a hotbed for Airbnb supply – some would argue it still is. Now that the city’s ruling has been upheld you have to wonder if this will bring back multiple units to the community’s rental housing stock? As Tousaw wrote, “Whatever the number, one fact is indisputable: each dedicated [short-term rental] unit displaces one permanent household. That household must find another place to live,” With new rules limiting Airbnb and other short-term rentals, this adjustment will benefit potential tenants and provide more housing options for long-term residences. Meanwhile, the amendment will positively affect the real estate market as there will be more housing supply for people in search of affordable housing.
The new zoning bylaw amendments will only allow short-term rentals to be in principal residences while prohibiting landlords to list secondary suites or basement apartments — only the tenants can rent them for 28 days or less. Moreover, homeowners or tenants have permission to only rent up to three bedrooms per year for less than 28 days or an entire house or apartment for 180 days a year.
According to Thorben Wieditz, a Fairbnb spokesperson stated, “Toronto has an extremely low vacancy rate of less than one percent, which means that only 10 units out of 1,000 are available… Even putting 5,000 units back on the market would significantly increase the vacancy rate.” The LPAT mentioned that this move could return 5,000 of the estimated 21,000 Airbnb condo units to the housing market, which represents 25% of total Airbnb units in Toronto. This limitation to short-term rentals strikes a balance to allow landlords to earn extra money while ensuring tourist accommodation and that Airbnb aren’t depleting the rental market in Toronto.
Not only will the amendment provide more available housing for residences in Toronto, but it will also limit the excessive noise and damage perpetrated by some Airbnb guests.
The new rules and regulations will be enforced through a licensing bylaw in which landlords who rent their homes short-term must pay the city a $50 registration fee with a 4% Municipal Accommodation Tax (MAT) on all rentals shorter than 28 days. Additionally, platforms such as Airbnb must pay a one-time license fee of $5,000 as well as $1 for each night booked. The enforcement of new rules is however unclear of when it will come into effect.
“While this ruling provides regulatory certainty for home sharing in Toronto, we continue to share our hosts’ concerns that these rules unfairly punish some responsible short-term rental hosts who are contributing to the local economy. We remain committed to working closely with the City of Toronto and the Airbnb community as these new rules are implemented.” Stated by Alex Dagg, an Airbnb spokesperson.
Liberty Village could be heavily influenced by the new zoning bylaws. In a Fairbnb report analysis, Thorben Wieditz, an advocate of Fairbnb stated, “the vast majority of Airbnb’s business in Toronto takes place in three hot-spot areas: Liberty Village, ChurchYonge and Toronto’s Waterfront-Island Community. It will stress that Toronto’s Airbnb business is disproportionately concentrated in what realtors call CO1” The report further mentions that Airbnb represents about 25% of Toronto’s overall short-term rentals, and Liberty Village is amongst those numbers. There’s an indication that some hosts in Airbnb are operating commercial businesses and renting multiple residential properties in a term described as “ghost hotels.” While we cannot stress enough that these Airbnb listings are slowly depleting the rental market in Toronto, it is safe to say that the LPAT approval can bring in more affordable housing for tenants in Liberty Village. The new regulations will also allow more units to become available for people in need of a home rather than turning these properties into hotels, and in turn, can be detrimental to local tenants and the Toronto’s rental market overall. As Wieditz stated, Toronto’s vacancy rate is less than 1% meaning that the local community is in desperate need of affordable rental housing.
Landlords of short-term rentals have 30 days to file an objection or request a review of the decision. It remains unclear if their actions will persist.
More information and details will be posted around December 2019 in regards to timeline and licensing bylaws such as registration, licensing fees, and Municipal Accommodation Tax (MAT).
The question remains as to how, where and when the rules will be enforced and who will take care of this matter. At the end of the day, the only way to implement this change is to take action and ensure that the new rules are strictly enforced – as actions do speak louder than words.
Also worth noting is that many of Liberty Village’s condo buildings already have restrictions on short-term rentals within their rules. It’s safe to say that without strict enforcement little change will occur.