Canada's Condominium Magazine

Toronto studying how to regulate short-term rentals as Airbnb continues to grow

Call it criminal behaviour or call it ingenuity, but a Toronto woman’s actions in defrauding a landlord have got her arrested. The woman allegedly signed a lease with fraudulent intentions with a downtown condo owner. First the woman’s rent cheques bounced, then the owner discovered that she was advertising the place for rent on Aribnb. The rules of the condo in question do not allow rentals for under three months. The condo owner has reportedly been trying to resolve the issue, i.e. have the woman evicted, for five months. The woman has a history of being evicted from rented condos for failing to pay rent. In fact, as reported in Metro News, she had previously been evicted from two units in the same condo building where the latest drama is playing out.

While the fraudulent renter’s behaviour is not typical, the fact that she saw Airbnb as a way to cope with her considerable financial problems is interesting, showing how complex the Airbnb phenomenon actually is, perceived as a solution for those looking to make a little money on the side, and as a threat to not only the hotel industry but to the rental population of cities and to cities’ tax revenues.

That threat is considered so great that the government of New York State just yesterday passed a law prohibiting owners of apartment buildings from operating “illegal hotels” by renting out their units for short terms. The law is intended to prevent landlords from opting to make more money by renting apartments to short-term tenants rather than to long-term tenants, something that could potentially contribute to New York City’s housing crisis. These so-called illegal hotels “jeopardize the safety and peace of our neighbourhoods” said the NY Senator who sponsored the bill, but it will not target homeowners, including condo owners, or interfere with their property rights. Airbnb, the obvious target of the legislations, has already said it will fight the new law and plans to sue New York City mayor Bill de Blasio, the state’s attorney general, and the City of New York.

Despite the positive ad, New York State has just banned short-term rentals in apartment buildings, prompting Airbnb to sue the New York City and its mayor.

In Toronto, too, there are concerns that Airbnb is already cutting into available rentals. In response, last week the City of Toronto released a report on how it might eventually regulate short-term rentals. The report notes that while the use of any given property is already regulated by zoning by-laws, these by-laws were not written to regulate the length of time a unit may be rented. The zoning requirements around short-term rentals are “complex” and must be considered “property by property,” the report states, partly because many zoning by-laws from the six former municipalities of pre-amalgamation days are still on the books.

Concerns have been raised about short-term rentals changing the character of neighbourhoods or condominium communities by increasing the number of short-term guests and decreasing the number of longer-term residents. There have been concerns about nuisance issues, like noise, and safety issues for consumers and neighbours. Of the three categories of short-term rentals raised above, it is likely that short-term rentals that occur in non-primary residences and when the operator is not present pose the risk of causing neighbourhood issues.

In the case of tenants renting apartments, they may “sublet” those apartments with the consent of the landlord, but the term “sublet” is not defined by the Residential Tenancies Act (RTA). Can a weekend rental be considered a “sublet”? Meanwhile, owners of rental buildings do not require approval under the RTA to convert a unit from long-term to short-term rental.

Airbnb listings in Toronto that were rented at least one time, 2010–2016 to date. Source: City of Toronto

As for condominiums, the City of Toronto report proposes to address the issue of how short-term rentals change the “character” of the condo community by increasing the number of short-term guests. Complaints by condo owners about nuisance, noise and safety issues have become common in Toronto. Most complaints seem to arise from what the city describes as “non-primary residence and operator not present,” in which a person purchases one or more condominiums for the express purpose of renting them out short term, as on Airbnb. In such cases, where the operator of the short-term rental does not live in the unit, it may be considered a hotel.

According to the report, there were more than 12,000 Toronto short-term rentals listed on Airbnb as of September, about 8,000 of them for condos. Most listings (72 per cent in 2015) were rented for 90 days or less.

The city says that in developing a regulatory framework for short-term rentals, it will balance the several competing goals that the phenomenon creates: the safety of consumers and neighbours, the availability of affordable rental housing, the promotion of tourism by supporting innovation in the accommodations sector, the right of residents to “occasionally” rent their own homes for short periods, and the necessity for clarity in whatever rules are implemented. Condominium associations are listed among the stakeholders that will be consulted, beginning in early 2017.

At present, those condo owners who wish to rent out their units on a short-term basis should first find out whether it is allowed by the rules of their condo corporation. Some condo boards have enacted rules to prevent short-term rentals. Condominium lawyer Tim Duggan advises, however, that any such rules enacted by a condo board, which must be voted on by the owners, must also be in compliance with the condo declaration. The condo declaration is a document that is registered by the building’s developer when the condo corporation is created. It could contain a provision stating that the corporation may not restrict short-term rentals, in which case the declaration would have to be changed before a board could legally do so. Changing the declaration requires the approval of 80 per cent of the owners.

Auberge on the Park-Tridel


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