Homes

Toronto proposes new rules for Airbnb, including limiting rentals to primary residents

By: Dominic Licorish on June 12, 2017

The City of Toronto proposed new rules Monday to regulate short-term rental services like Airbnb, including limiting rentals to primary residents.

The rules would hit those with multiple properties particularly hard, as owners will have to register any units that aren't their primary residence as a commercial property — and pay additional taxes. That rule is one of many changes that could be in store for Airbnb hosts this year.

Airbnb has been in the crosshair of regulators since it launched in 2008.  At first, hotel chains took issue with the service, complaining that owners didn’t have to pay the sort of taxes that hotels did — allowing them to offer rooms for cheaper.

Airbnb hosts have also attracted scorn from neighbours. Complaints of rowdy Airbnb units and “ghost hotels” have become increasingly common in Toronto, where wealthy landowners with multiple properties run airbnbs out of their secondary homes, keeping them off of the rental market. The lack of rental units have been cited as a reason that Toronto rents and home prices have spiked to an all-time high.

The new Airbnb proposal also includes licensing and registry requirements for both short-term rental hosts and the companies that facilitate that service. The proposed host registry will come with a $40 to $150 fee and companies will be required to only use registered hosts. Hosts will also be required to include their registry number on all advertising, further increasing transparency and accountability on their part.

Short-term rental companies such as AIrbnb will be subject to an annual fee, as well as a fee per night booked. Finally, a short-term rental tax of 10% and a hotel tax of 4% have been proposed, though the city’s backgrounder doesn’t specify who would be responsible for paying either of the taxes.

The recommendations are set to be reviewed by the city’s executive committee in Q4 2017, which suggests changes are unlikely to go into effect before 2018.

The city of Toronto has promised to crack down on the booming business of short-term rentals AKA Airbnb for some time now. Now we have our first look at what it might look like.

Airbnb hosts with multiple listings may be about to take a major hit to their side businesses. Among the recommended regulations for short-term rentals is a zoning requirement that “short-term rentals” only be permitted in permanent residences. That means owners of multiple Airbnb units will have to register any units not their permanent home, as a commercial property. That rule is one of many changes that could be in store for Airbnb hosts, as the city decides what regulations would be best for everyone.

Airbnb has been under fire for almost as long as it’s existed. At first, hotel chains took issue with the service, complaining that it competed unfairly with them. Now, however, Airbnbs have become enemies of city residents as well. Complaints of rowdy Airbnb units and “ghost hotels” have become increasingly common in Toronto, where wealthy landowners with multiple properties run airbnbs out of their secondary homes, keeping them off of the rental market. The lack of rental units have played a big role in pushing Toronto’s average rent to an all-time high.

Apart from the new zoning rules, the short-term rental review also includes licensing and registry requirements for both short-term rental hosts and the companies that facilitate that service. The proposed host registry will come with a $40 to $150 fee and companies will be required to only use registered hosts. Hosts will also be required to include their registry number on all advertising, further increasing transparency and accountability on their part.

Short-term rental companies such as AIrbnb will be subject to an annual fee as well as a fee per night booked. Finally a short-term rental tax of 10% and a hotel tax of 4% have been suggested, though the city’s backgrounder doesn’t specify who would be responsible for paying either of the taxes.

The recommendations are set to be reviewed by the Executive Committee in Q4 2017, which suggests changes are unlikely to go into effect before 2018.

 

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