Airbnb in Toronto

Airbnb started out in 2008 to help people who were leaving their homes for brief periods of time to rent out their personal space for some extra money. Here in 2019, it features over 6 million listings in 191 countries. This meteoric rise in prominence has brought both good and bad for the cities featuring it. Recently, legislation passed in the city of Toronto limits the scope of the eponymous app. Today we’ll take a look at Airbnb, its impacts on our city, and how this legislation aims to help.

For those unfamiliar, Airbnb allows home owners to rooms, apartments, or whole houses to renters, generally for short periods of time. This is run through a simple to use website and app, easy for people of all levels of technological skill to navigate.

Tourists in particular were blessed by this new way to plan their vacations. Airbnb rentals are typically cheaper than hotels, and having access to a stocked kitchen would allow them to cook their own food and save money. Vacationers also say they enjoy a more “authentic” experience, renting homes farther from tourist centres that build up around areas populated by hotels. Surrounding businesses tend to be cheaper as they cater to the average local, not a tourist experience.

Short-term rentals are also particularly helpful for more utilitarian uses: doctors coming in from out of town for a brief period to work, families looking for temporary residence while they attempt to look for long term homes, and people recovering from medical procedures in the city.

Only paying a small percentage of their rental revenue with the app (and no listing fees) allows landlords are able to turn high profits from short term rentals. Home owners enjoyed the ability to make some money off of their property when they, themselves were away for work or vacation. Hosts just had to keep up with cleaning and supplies.

Unfortunately, as with every monetarily advantageous system, abuse would be sure to follow.

 Negative Impact

Companies invested heavily in Airbnb-based ventures, buying up property not to rent part time while they lived there, but to host short-term rentals exclusively. This produced higher profits for them than long-term rentals would, and with less legal responsibility. These companies would buy multiple condos, or houses, creating so-called “ghost hotels,” where people come and go with no check-in but the invisible and silent process online. This could be disruptive for long-term residents in neighbouring units or houses, especially in situations where partygoers would flood single residences for a night or more, creating noise and uncomfortable situations.

Unique and stylish neighbourhoods that gained their high status from the people that built them are now losing those people as more and more of the rental market disappears to Airbnb.

Toronto’s rental vacancy rate is currently hovering around 1.1%, where the average for a healthy market should be closer to 3%. A study in May of 2019 showed that as many as 0.8% of the city’s dwellings are Airbnb listings. According to Fairbnb, although commercial hosts make up less than a third of Airbnb hosts, they generate an outsized 73 percent of total revenue in Toronto.

To be fair, Airbnb are only one part of a complex problem affecting the local rental market. A rising interest rate, rising prices, and strict mortgage qualification rules make it difficult for people to buy homes, and so they look to rent. Also, Toronto’s population has been rising rapidly due to the tech industry boom and immigration, creating even more need for new, affordable homes.

Analysts assure that if even a fraction of the homes listed full-time on Airbnb were to be returned to the rental market, it would have a noticeable impact on the health of our housing situation.

Toronto’s New Airbnb Legislation 

Rules similar to those already in place in Vancouver were set out and approved by city council in December of 2017. Some landlords objected to the ruling, leading to a gruelling, nearly 2 year process of getting the plans passed by a provincial tribunal. Now in November 2019, the rules have finally gone into effect. They are:

·      Short-term rentals are only allowed in the landlord’s principal residence

·      A residence cannot be rented for more than 180 nights a year

·      Homeowners can rent a maximum of three bedrooms all year long for no more than 28 days at a time.

·      Landlords aren’t allowed to list secondary suites or basement apartments as short-term rentals at all—only the tenants who live there can rent them for 28 days or less.

·      Landlords must register their rentals with the city and pay $50.

·      Rental platforms such as Airbnb and VRBO have to pay a one-time licence application fee of $5,000 as well as $1 for every night booked.

·      Landlords will have to pay an accommodation tax of four percent on short-term rentals (less than 28 consecutive days).

These laws take aim specifically at companies purchasing multiple properties to rent short-term, and look to protect the status quo for those using the program casually for extra income while away from home. They also will generate money for the city to improve infrastructure.

It’s yet to be confirmed how the city plans to enforce these rules, but the hope is that this will improve the health of our troubled rental market – the Local Planning Appeal Tribunal estimates it will put another 5,000 units back on the market.

Toronto is making the choice (in this case at least) to put its full-time residents first, over corporate interest and temporary visitors. What do you think? Have you hosted or used Airbnb? Are you happy about the new rulings? Send us a message – we’d love to hear from you and share your opinion.  

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