New Airbnb and Short-Term Rental Regulations in Toronto

by Karim Barbary

Following the decision made on November 18, 2019 by the Local Planning and Appeal Tribunal (LPAT), new rules will be put in place that govern short-term rentals in Toronto. Here's everything you need to know about the new short-term regulations.

First, we should note that the decision of the LPAT is not final and that Landlords have 30 days from the release of the decision to request an appeal. Although the option to appeal might not be for everyone, it is expected that these regulations are here to stay.

Take-aways from the new short-term rental regulations:

  • People can only host short-term rentals in their principal residence, meaning the residence they live in
  • A short-term rental is considered any duration less than 28 days
  • Hosts renting bedrooms within their residence can now only rent up to three bedrooms of their home on a short-term basis
  • For an entire house or apartment, short-term rentals are only allowed for up to 180 nights a year
  • Hosts are not allowed to use basement apartments as short-term rentals — only a full-time resident of a basement apartment is allowed to do so
  • People who rent their homes as short-term rentals need to pay a $50 fee and register with municipal officials
  • Short-term rental companies, such as Airbnb, will have to pay a one-time licence application fee amounting to $5,000 plus $1 for each night booked through the company
  • Hosts will need to pay a 4% Municipal Accommodation Tax (MAT) on all revenue generated from short-term rentals
  • Airbnb and other similar companies will have the opportunity to enter into voluntary agreements to collect the MAT on behalf of the hosts

The city of  Toronto has announced that they will move forward with implementing the rules, however, they did not provide a timeline as to when they will start to take effect. The city says it will have more information in December 2019 about implementation, timelines, licensing, and details of how the 4% Municipal Accommodation Tax (MAT) will work.

What does this mean for Toronto Real Estate?

Landlords & Hosts

If you're a property owner or Airbnb host with multiple properties in the short-term rental market, then you got the short end of the stick with theses new regulations. The aim here is to implement stricter regulation for people who use Airbnb to run what is basically a hotel business, with multiple properties available year-round. Since the rules only allow you to only rent your principle residence on a short-term basis then your business could be in serious jeopardy.

If you're just a regular host that looks to rent out their primary home every now and then when you're travelling or need some extra cash, then these regulations might actually benefit you. Yes, there is the 4% tax and some other fees but a lot of these regulations will remove a large supply of Airbnb listings. Your property will have less competition and you might be able to charge higher rates, ultimately making it easier and more profitable for you.

Renters

If you're currently looking to rent in Toronto or will be moving in the near future then this could be great news for you. Since a lot of the current properties on Airbnb (and other platforms) will no longer be able to continue to operate as short-term rentals, a majority of them will probably come back on the market as long-term leases. This will give you more options to choose from since it will increase supply.

The LPAT said that this could could return about 25% of homes currently on Airbnb in Toronto, which is about 5,000 units, back to the long-term rental market. This increase in supply could help to alleviate the upwards pressure on rent prices in Toronto and give long term renters more options to choose from.

To learn more about the newly introduced short-term rental regulations visit the City of Toronto's website. You can also read the amendments to the Toronto Municipal Code.

Have any unanswered questions or would like to learn more about renting your home in Toronto?  Visit Dwelly.ca where you can ask questions via our live chat.