Backgrounder: Toronto’s Short-term Rental Review

June 12, 2017

Short-term rental platforms such as Airbnb and VRBO (Vacation Rental By Owner) are operating worldwide – it is not a Toronto-specific issue. Cities are in various stages of research and regulation.

Residents and property owners are renting out rooms or entire units for short periods in growing numbers across Toronto, facilitated by the rise of these online platforms.

These short-term rentals are not currently regulated by the City. There are a number of concerns that have been raised in relation to noise, safety, housing affordability, impact on tourism and taxation.

Executive Committee directed that a multi-divisional interim report be brought to City Council in 2016, with a final report with recommendations in 2017.

An extensive jurisdictional scan, comprehensive research, and consultation were conducted as part of developing the proposed regulations.

Background

On January 28, 2016, City Council directed Municipal Licensing and Standards and City Planning to provide an interim report in the third quarter of 2016 and a final report in 2017 on regulating temporary accommodation rentals.

On October 28, 2016, City Council directed Municipal Licensing and Standards and City Planning to report no later than the end of the second quarter of 2017 with proposed regulations for short-term rentals.

On December 13, 2016, City Council requested that the Province make legislative and/or regulatory reforms to grant the City authority to collect a hotel and short-term rental tax.

On Feb 15, 2017, City Council endorsed the creation of a hotel and short-term rental tax in the City of Toronto, at rates of four percent of hotel accommodation revenues, and up to 10 percent of short-term rental revenues, subject to receiving the necessary legislative authority, for implementation as soon as practical in 2017.

Short-term Rental Review consultation:

  • Held two public meetings with facilitated group discussions (320 attendees)
  • Ipsos research – statistically representative general population survey and focus groups with industry stakeholders
  • More than 4,000 responses to online general population survey
  • Five targeted stakeholder meetings
  • Stakeholder and regulator workshops by MaRS Solutions Lab
  • Written submissions from industry, companies, organizations and residents
  • One of those meetings was streamed online on YouTube with interactions with staff on Twitter (700 views of the online videos posted on Twitter)

Short-term Rentals:

Airbnb has the most short-term rentals listed in Toronto. The following data was provided by Airbnb:

  • In 2016, Airbnb listed approximately 10,800 properties in Toronto
  • Number of Airbnb rentals in Toronto tripled from 2014 to 2016
  • 72% of all listings rented in 2016 were in condominiums, apartments or lofts
  • 53% of listings in 2016 were downtown

Recommendations in report to Executive Committee

The proposed regulations were based on the following principles:

  • permit people to rent their homes for short periods;
  • minimize negative impacts on housing affordability and availability;
  • enable greater diversity in tourism accommodations;
  • maintain community stability, including in vertical communities;
  • minimize nuisances; and
  • create regulations and taxation systems that are fair and easy to follow for people and companies.

The regulations fall into three categories including zoning, licensing and taxation.

Zoning:

  • amend the Zoning Bylaw to create a new land use called "short-term rental" permitted city-wide, only in principal residences
    • includes a secondary suite in a principal residence such as a basement apartment
  • limit the number of rooms in a dwelling used for short-term rentals to a maximum of three
  • short-term rentals are permitted in any type of house (detached, row, townhouse, condo, apartment) as long as it's the principal residence, whether owned, rented or leased

Licensing and registration:

  • license companies that facilitate short-term rental activity (Airbnb, VRBO, etc)
    • associated fee of between $5,000 and $20,000, plus fee per night booked
  • create registry for residents who operate their homes as short-term rentals
    • associated fee between $40 and $150 per home
  • prohibit short-term rentals that are not in principal residence – these would be considered "commercial"
  • companies required to use only registered operators/hosts
  • short-term operators must post registration number in all advertising

Taxation:

  • Implement a hotel and short-term rental tax in conjunction with the proposed licensing and registration framework, subject to Provincial approval (regulation anticipated later this year) and Council approval
  • Hotel tax will be 4% and short-term rental tax up to 10%, subject to receiving necessary legislative authority

 A final report, with recommendations, is expected to go to Executive Committee in the fourth quarter of 2017.

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Media contacts:
Tammy Robbinson, Strategic Communications, 416-338-3761, tammy.robbinson@toronto.ca
Bruce Hawkins, Strategic Communications, 416-392-3496, bruce.hawkins@toronto.ca

 


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