Toronto strengthens bylaw to close short-term rental loopholes
Toronto city council says it has strengthened its short-term rental bylaw to crack down on operators who exploit regulatory loopholes.
Council is raising registration fees, increasing vetting of hosts and allowing for snap inspections through changes to the city’s short-term rental bylaw. The city will also hire nearly two dozen more inspectors.
Council passed changes to the bylaw at a meeting on Thursday night.
Mayor Olivia Chow said on Friday that the bylaw amendments will help to address the city’s housing crisis. She said the changes will allow legitimate users to rent out their homes while giving the city increased powers to crack down on speculators.
“Yesterday’s motion actually achieved a fine balance. We’re going to have more inspectors and we’re closing loopholes,” Chow said.
In 2021, Toronto introduced its short-term bylaw to govern rentals that operate through online platforms such Airbnb. Since then, critics have said the city hasn’t done enough to combat people breaking the rules, renting out properties that aren’t their primary residences.
Coun. Gordon Perks, who represents Parkdale-High Park, said council is fighting back against operators who abuse its short-term rental bylaw and make rentals that much harder to find.
“What we did was to update our regulatory framework for Airbnb, short-term rentals. The core element is still that you have to live in a place in order to put it on Airbnb. You can’t just own a bunch of places and have them sit vacant except for your Airbnb tenants,” Perks said.
“We found that a lot of people were gaming the system. We’re trying to stop some of those games. Legitimate operators don’t have anything to worry about. But if you’re trying to game the system, we’re going to going to get you,” he added.
Perks said some people were providing false identification to get multiple listings, but said the city has figured out a way to prevent that activity. It will be able to ask operators to submit at least two documents in addition to government-issued identification to demonstrate that the proposed short-term rental is their principal residence.
Perks says the bylaw amendments should also help to address the rise of so-called ghost hotels. These are buildings, with a large number of short-term rental that aren’t regulated as hotels.
“This will give us a lot more tools to trap the people who don’t live in the units but are putting them out as if they were hotel rooms,” Perks said.
Perks said the amendments will improve data collection, clarify responsibility around identification and registration and allow spot inspections by staff.
According to the city, a short-term rental is all or part of a dwelling unit rented out for less than 28 consecutive days for payment. These rentals includes bed and breakfasts but excludes hotels and motels.
The city says a short-term rental company is any company facilitating or brokering short-term rental reservations online and receiving payment for this service, such as Airbnb and Booking.com. All short-term rental companies are required to obtain a licence to operate in Toronto.
The city regulates short-term rental activity by requiring short-term rental operators to be registered and short-term rental companies to be licensed with the city and abide by operational standards and regulatory requirements. The regulations allow property owners and tenants who are registered as short-term rental operators to rent their principal residence for a period of less than 28 consecutive days.
‘The rules are the rules’
Nathan Rotman, Airbnb regional lead for U.S. northeast and Canada, said on Friday that Airbnb is pleased with the changes but believes the updated rules do not represent a major change.
“The rules are the rules. And people need to follow the rules. And Toronto has a restriction to primary residences only. We support that and work with the city to ensure that hosts understand those responsibilities,” Rotman said.
JJ Fueser, researcher with the Fairbnb Canada network, said council has adopted a much stronger enforcement regime by updating its rules. She said the network supports the changes, which she called a step forward, and believes the rules will crack down on a number of scams.
“Council essentially reaffirmed loudly and clearly that the intent of the short term bylaw in Toronto is meant to allow people to earn supplementary income by short-term renting within their own home, their principal residence, but to make sure that we protect housing supply and stop tenants from having to compete with tourists in the housing market in general,” she said.
Scams ‘getting shut down,’ researcher says
Fueser said the changes were all about making sure the hosts abide by the principal residence requirement. Fairbnb thinks the bad actors number only about 5,500 out of up to about 9,000 short term rental hosts in Toronto.
“You’d see people, for example, list their principal residence or list one residence, and then send guests to a wholly different place. You would see illegal listings being taken down and then somebody else reopening that listing under another account the very next day, to the never-ending frustration of neighbours. You would see people stockpile investment properties and find fake tenants to pose as principal residents,” she said.
“All of that is getting shut down.”
In a city staff report, staff said they had recommended: strengthening the principal residence requirement through improvements to registration standards; amending definitions to clarify the bylaw; enhancing advertising, data sharing and data verification requirements with short-term rental companies; streamlining the process to revoke a short-term rental operator’s registration; and introducing additional measures to curtail rental activity by unregistered operators.
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