Toronto to usher in series of short-term rental reforms

Canada: Toronto is to introduce a new set of short-term rental reforms, which will affect hosts and operators listing their properties on online travel agencies such as Airbnb, Booking.com and Expedia in the city. 

Effective from 10 September 2020, the OTAs will be required to obtain a specific licence to be able to continue operating in the city. Meanwhile, the short-term rental operators themselves will have to display a unique registration number on all advertisements and listings of their properties, as well as collect a four per cent Municipal Accommodation Tax [MAT] on a quarterly basis from 1 January 2021.

A press release issued this week by the City of Toronto read: “Beginning Sept. 10, 2020, short-term rental operators will need to start registering with the City in order to operate in Toronto. Registration is a necessary first step to allow the city to effectively administer the new rules applicable to short-term rentals.”

Under the new rules, short-term rental landlords must also only rent out their primary residences, once registered, for a strict number of nights a year, which is capped at 180. Toronto residents renting out their homes or parts of their homes for less than 28 days at a given time are obliged to register as short-term rental operators by the end of the year.

The aim is that this will prevent disruption to local neighbourhoods caused by raucous parties at so-called ‘ghost hotels’, whereby the landlord does not live at the property and it is only one of multiple units they are managing.

Similarly, critics have voiced their opposition towards so-called “investment properties” inside condo buildings, which can be left largely free for tourists to book on a short-term basis and the landlord is not present.

While the number of vacant properties or ‘ghost hotels’ has inevitably tailed off over the summer due to restrictions on mobility, concerns over traveller safety and a ban on most short-term rentals between April and June, the City of Toronto has been at odds with its local short-term rental industry for some time. Furthermore, the increasing prevalence of violent incidents in ‘party houses’ has prompted action from the city’s authorities are years of legal wrangling.

Three years ago, the city council voted to crack down on Toronto’s flourishing short-term rental market, which was boosted by Airbnb, but only now have the desired reforms been passed. Then in November, a provincial tribunal ruled in favour of a Licensing and Registration of Short-Term Rentals bylaw in the city, to regulate a market which is believed to have had an estimated 10,000 illegal Airbnb listings at the start of the year.

Over the past year, however, a number of shooting incidents in the surrounding areas of Toronto, including Etobicoke, Bridlepath and Danforth, led to renewed calls for action on stricter regulations on short-term rental units.

In response to a further fatal shooting incident in downtown Toronto, Airbnb announced it would be limiting under-25s in Canada from renting whole properties to improve trust on its platform by eradicating its party house problem once and for all.

In an emailed statement to BlogTO, Alex Dagg, regional policy director at Airbnb for Canada and North East US at Airbnb, said: “Airbnb has been working collaboratively with the city of Toronto on the registration effort for many months.

“Most recently, we connected the city with Airbnb hosts to conduct focus groups pertaining to the development of its new registration system for short-term rentals. We are currently in discussion with the city on our platform licensing application and look forward to being licensed in the city,” she added.

The City of Toronto says it will work with short term rental operators and brokerages like Airbnb over the next few months to help everyone understand the rules.

Toronto mayor John Tory said of the registration programme: “This is good news for Toronto residents and a step in the right direction when it comes to regulating short-term rentals and maintaining the peace and quiet of our neighbourhoods. This system will provide crucial oversight of operators and ensure that they are held accountable and only operate within their principal residences.”

The full summary of Toronto’s short-term rental reforms, including deadlines for its registration programme and other restrictions, can be viewed on the city’s website here.