Toronto legislators have been battling with the housing shortage crisis for a while now. Besides numerous housing measures that were and are about to be adopted, they are now focused on short-term rentals and their impact on the lack of long-term rental units. When talking about short-term rentals, Airbnb earners proved to be one of the major stakeholders in the lucrative market.
New details came to light after urban planning researchers from the McGill University published a draft report on Airbnb earnings in the three largest Canadian cities (Toronto, Vancouver, and Montreal). The research showed that the market is dominated (not to say monopolized) by individuals who rent out hundreds of housing units. This means that only a handful of people, e.g., 10% of hosts, earn 50% of the total Airbnb revenues which brings in millions on an annual basis. The report highlights three major problems which are referred to as “the triple threat,” and they are: full-time renting of units which are supposed to be short-term rentals, renting entire homes, and multiple listings.
In Toronto, revenues from Airbnb activity grew by incredible 100% on a year-on-year basis, and according to the report, over 3,000 out of 10,800 listed rental properties are not the hosts’ principal residences. It is alarming that such platforms turned into a profit hunt at the expense of housing supply according to housing advocates. The report also indicated that there is room for further growth of the market which would further threaten housing availability. Namely, the number of units registered with Airbnb grows by month, and it is obvious that these properties could (and according to the government should) be made available for long-term renting.
Airbnb representatives delivered a statement regarding the study and denounced the results claiming that hosts from Canada are not wealthy million-earning giants, but people who rent a part of their own home to earn on the side and that the data used in the study were not properly represented.
What does the potential regulation exactly include?
A new set of bylaws would consist of three parts. The first one is zoning and refers to limiting the rental space to principal residences and the number of rooms to three. It would also limit the duration of stays to 28 days. The second part would define a 4%-10% tax for short-term rentals and hotels. The third part relates to licensing the platforms and companies such as Airbnb, whereby they would have to pay a fee from $5,000 to $20,000 in addition to a booking fee. The new regulation also envisions a registry of short-term rental units, and hosts would also have to pay a respective renting fee from $40 to $150 per housing unit. In accordance with that, only registered hosts would be allowed to advertise their services with short-term rental platforms. Short-term rental hosts have had the luxury so far to operate in the gray zone, but after the new regulations enter into force, it will be much clearer who can run such a business and under which conditions.