On the right track
The City of Toronto is on the right track with its proposal to rein in the explosive growth of short-term rentals like Airbnb.
It’s easy to understand why they’ve become so popular: instead of checking into an expensive hotel or imposing on friends or family, you can go online and quickly rent a place to stay for a few nights.
For most Airbnb operators it’s a modest sideline: the company says 80 per cent of Airbnb “hosts” in Ontario are renting out their primary residence and take in just a few thousand dollars a year.
But a minority have been turning their Airbnb operations into substantial businesses. They’re competing with regular hotels and, some fear, taking scarce rental units out of an already tight market.
Recommendations from city staff — which must still be debated by council — are aimed at allowing the benefits of short-term rentals to continue while fighting the excesses that can come with them.
The main proposal is to limit such rentals (lasting less than 29 days) to a person’s principal residence. Simply put, you’d be able to rent out rooms in your home, or the whole unit if you’re away, but you wouldn’t be allowed to convert another apartment or house into accommodation for tourists.
The city estimates that would allow 7,600 properties that were rented out through Airbnb (by far the biggest short-term rental company in Toronto) to continue to operate. But another 3,200 units would not be allowed because they don’t appear to be the principal residence of the renter.
It’s far from clear how big an impact Airbnb and the like have actually had on the rental market. The company argues it’s a very small factor in such a huge city. But there has been anecdotal evidence here and in cities like San Francisco that landlords have evicted tenants to convert apartments to Airbnb units, so there’s understandable frustration among people struggling to rent a decent places at an affordable price.
The city is right to resist such a trend, however big. Aside from taking units out of the rental market, overuse of short-term rentals can change the character of neighbourhoods by driving out permanent residents in favour of a stream of temporary visitors.
Requiring homeowners to demonstrate that the space they want to rent out actually is their primary residence would stem the rise of big-time operators. And it’s along the lines of what some other cities (including Vancouver) have done to bring order to the shortterm rental market.
The city is also right to contemplate bringing in a tax on income from such operations. Under its proposed rules, short-term rental companies would be required to pay a licensing fee, and the city is also considering a new tax on hotel rooms and Airbnb-style rentals.
The Wynne government’s most recent budget contained a measure that would allow Toronto to impose such a tax for the first time. The city would be well-advised to go ahead with that and make sure it levels the playing field between hotels and short-term rentals, which have been getting a free ride up until now.
Toronto has dragged its heels on coming up with a way to regulate a sector that has been growing by leaps and bounds in the past few years. But the regulations now being proposed seem to strike a good balance by keeping the benefits of short-term rentals while curbing the worst excesses.