Time to set some rules

The so-called “sharing economy” has changed a lot about how we live and work, and now it’s reshaping how we travel.

Instead of booking into a hotel or bunking with friends or family, in most cities you can go online at Airbnb or similar sites and quickly find a room, apartment or entire house to rent for a night or a week.

For travellers, it’s a huge plus to be able to stay in a private space, often in a lively local neighbourhood rather than a tourist area, and often for less money. And for many homeowners being able to make money off their principal asset (their home) can be a boon.

It’s a fast-growing sector, but right now Toronto effectively has no rules to make sure it operates to everyone’s benefit. The city has taken a go-slow approach on regulation, but it needs to step up the pace and figure out a way to make sure short-term rentals bring maximum benefit while discouraging the abuses that can accompany them.

City staff are expected to produce a report this month on Airbnb and similar operations.

But that will be just a starting point for further discussions, leading to regulations sometime next year.

That’s a long time to wait to put in place guidelines for a sector that has been growing by leaps and bounds in the past few years.

Airbnb was founded in 2008, but according to a recent report it didn’t take off in a big way in Toronto until 2013.

Now, says the company, there are more than 15,000 Airbnb “hosts” in Ontario, with 8,600 of them in Toronto. Most, it says, are small players: the “typical” host makes just $3,900 a year and the vast majority (88 per cent) are sharing their primary residence. If that was all there was to it, there wouldn’t be much of an issue. But as in other cities, there’s evidence some hosts are renting out multiple dwellings and turning their Airbnb operations into substantial businesses. One study suggests that just13 per cent of hosts with more than one listing on Airbnb are scooping up 46 per cent of the revenue in Toronto.

In other words, they’re running operations that compete with regular hotels that employ staff and pay business taxes. At the same time, some fear they’re taking scarce rental units off the market and making Toronto’s affordable housing crisis even worse.

What to do? In some cities — such as Airbnb’s hometown of San Francisco — short-term rentals are highly controversial. That city was among the first to regulate Airbnb and similar sites two years ago, and it has tied them up in so much red tape that potential “hosts” find it hard to operate.

New York City has taken a similar route with a host of complicated regulations.

There’s no need for Toronto to try and drive short-term rental sites out of business. For one thing, it would be almost impossible. As with so many technology-driven platforms that have disrupted industries as diverse as music, taxis and newspapers, they’re here to stay — whether we like it or not. Airbnb alone says it has two million listings in 192 countries.

Better to find a way to keep the benefits of sharing while fighting its excesses. For that, Toronto can look to other cities that are ahead of us in trying to figure this out.

Vancouver, for example, has drafted regulations that would allow renters or homeowners to prove the space they want to rent really is their primary residence.

And Chicago has passed regulations that would make it easy for a would-be host to list one rental space on Airbnb, but make it tougher to list a second or third property. It would require units that are rented for more than 90 days a year to be registered as commercial property. And it would impose a 4-per-cent tax with revenue earmarked to address affordable housing problems.

A proper regulatory regime should also provide a way for neighbours to complain about nuisance and abuses from short-term rentals.

All that may not satisfy those who believe Airbnb and the like are making the local housing market even tighter. But there’s actually little clear evidence they’re having much of an impact in such a big market.

Both Airbnb and its critics — organized in Toronto as a coalition called “Fairbnb” that includes the hotel industry and some antipoverty groups — are urging the city to adopt a regulatory framework for short-term rentals.

They certainly won’t agree on exactly what should be done. But both are right that the city is behind the curve in coming to grips with the problems posed by this rapidly growing sector. It should speed up its work and come up with a solution that strikes the right balance.