Toronto Income Property Newsletter: September 2016

There was talk last month of some downtown condo owners being concerned that their neighbours were renting out their condos on a per night basis to renters through Airbnb. The concern was parties and loud noise from potential people next door while no one in the complex knew who they were.

Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city's zoning or administrative codes. In many cities, you must register, get a permit, or obtain a license before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Toronto has no such restrictions in place.

This phenomenon is the part of the new sharing economy, where like Uber, people can open their doors to anyone with no widespread regulations. We all know the controversy that Uber has caused amongst cabbies in our city. What has been created is a gray area in the economy in between hotels and homes, between cabs and private cars, between businesses and hobbies, between professional spaces and personal ones. Most landlords prefer to have tenants on formal leases but there has always been a market in Toronto for short-term furnished rentals.

Some officials have been talking about a bill to extend the hotel tax to short-term rentals, including vacation homes and rooms rented through increasingly popular online companies like Airbnb. Others say the bill doesn’t go far enough, arguing that, in addition to new taxes, the fledgling industry should be subjected to new regulations. In Ontario we have the Tenant Protection Act which governs the relationship between landlord and tenant. Hotels and Airbnb rentals are not subject to the Act. The Los Angeles suburb of Santa Monica has instituted America’s toughest regulations on short-term rentals like Airbnb. Hosts will have to live on the property during the renter’s stay, register for a business license and collect the city’s 14 percent occupancy tax. There are other cities across North America looking at similar measures so like Uber it may just be a matter of time before things come to a head here in Toronto.