The latest Airbnb rules and regulations are projected to heavily impact the investment property market and place a number of short-term units back on the market. Almost two years after Toronto City Council approved regulating the short-term rental market, the appeals were finally dismissed. The zoning bylaw amendments were officially adopted and put into effect on November 18th, 2019. This move has the potential to return approximately 5,000 units to the rental market and help long term renters find affordable rent in the city. But not everyone is happy about this decision. Investment property owners and corporate rental companies who rely on the short-term market to fuel their cash flow will have to switch to long term rentals in order to rent out their units in Toronto.
Learn more about the new Airbnb regulations and what to expect if you’re a renter or if you own an investment property in Toronto.
The new rules exclude hotels, motels, and accommodations where there is no payment involved.
A significant number of the Toronto Airbnb listings were located downtown in investment properties. Many were used as vacation rentals, business rentals, and weekend stays, booking feverishly and making a considerable profit. Under the new rules, investment property owners will no longer be permitted to rent their unit as a short-term rental. They will need to return that unit back to the long-term rental market, which will likely reduce their profit potential, or find another use for the property. The rules will also apply to homeowners renting out their secondary suites and basements for extra income.
Those who own 2-bedroom condos and rent out the other room will now have to abide by the maximum 28-day timeframe as well. And those who rent their entire primary residence year-round will no longer be able to do so. They’ll need to reduce their rental period to 180 days or less.
To remain compliant, all landlords and hosts will be required to register their rentals and pay the required fee. At the time of registration, they will need to provide government-issued ID to prove that they are over 18 and that the property is their principal residence. Their contact information, address, details of the rental, and emergency contact will be included as well. It will also be compulsory for hosts and landlords to keep all records of the short-term rental activity on hand to provide to the city upon request.
The short-term rental companies responsible for about a third of the listings will likely feel the changes the most, as they will be forced to adapt their business model. The transition to long-term listings will likely reduce their profits and they will also be required to put the required procedures in place – requiring more time and resources.
All short-term rental companies that facilitate or broker short term reservations will be required to be properly licensed and ensure that all their listings have accurate registration numbers. They will also be held responsible for putting in procedures to deal with operators (hosts and landlords), responding to complaints, removing any listings that do not have registration numbers and keeping up to date records on all rental activity.
The new regulations are projected to be a big win for renters. Thousands of units are expected to be returned to the long-term rental market with the potential effect of reducing rental prices over time. Renters will also be able to rent out their unit on the short-term market even if they are renting a secondary suite, but only for 28 days at a time.
Enforcement has not yet started. The new online registration, licensing, and enforcement systems are currently being put in place and are expected to begin in Spring 2020. This will give everyone a chance to adjust to the new rules and switch from short-term rentals to long-term or sell all together. Current and prospective short-term operators will have three months to register and start paying the required fees and taxes in order to avoid the contravention of the bylaw.
Contact us today at Medallion Capital Group to find out more about the latest Airbnb regulations and how it will impact your investment and the Toronto real estate rental market. If you are looking to transition your investment property to a long-term rental in light of these changes, we have the expert property management team you need to succeed.