UPDATED Dec. 7, 2017
Toronto’s city council moved new licensing regulations for short-term rentals on Thursday.
Here are 10 things to know about the new policy:
1. SHORT TERM – 28 CONSECUTIVE DAYS
The regulations are for short-term rentals – meaning all rentals defined as less than 28 consecutive days.
This means any rental that is less than 28 days must follow the regulation, but longer stays will not.
2. 180 DAYS MAXIMUM
The regulation is for a maximum of 180 days, or about half a year.
This means a total of 180 days for short-term rentals (less than 28 consecutive days). However, the rules do not prevent subletting for six months straight, and then short-term periods the rest of the time to a maximum of 180 days per year.
3. HOST = OPERATOR = PRINCIPAL RESIDENCE
What Airbnb calls a “host,” the city calls an operator. The point is, if you’re renting your home it has to be your principal residence. Staff are proposing the new policy require a declaration of principal residence and some form of government identification to register, but the ID may not need to note address.
This means that if you have a second property (what some call an investment property) you will not be able to rent it for less than 28 days at a time.
4. $50 REGISTRATION
If you’re renting your place, the city is proposing an annual registration fee that would cost $50. If you don’t register, you’ll be in contravention of a bylaw and could be fined up to $100,000.
This means that all operators are paying the same amount, no matter how much they use their property for rental.
5. HOW IT WORKS
Once registered, the operator will be given a number they will use and post when advertising on platforms such as Airbnb and VRBO.
This means that you won’t be able to use Airbnb to rent your home for less than 28 consecutive days unless you register. The proposed licensing system does not require registration for operators on Airbnb if renting for longer than 28 days.
The registry is owned by the city, and websites such as Airbnb will have a way to connect through their platforms for the system.
This means that the city will have access to the registrant’s name, principal address, and whatever government ID is required by the policy. The limitations on the use of this information in the registration are not yet clear. When asked how long the city will use the information on the registry, Tracey Cook, the executive director of Licensing and Standards for the city, told reporters last week, “As long as they’re registered.”
When registering with the city, people renting their homes (the operators) will need to provide the city with the number of nights their home was rented for the previous year. Companies are required to keep transaction records of every short-term rental listing for three years that includes name, address, registration number operation, number of nights rented, rental type, and the number of listings removed due to non-registration. There will also be enforcement triggered by complaint. “If someone is operating and it’s not their principal residence, we undertake investigation and determine that we have sufficient evidence to support that they are not operating in their principal residence, they’ll be charged,” Cook told reporters in November when the regulations were first announced. Operators may be prohibited from registering if they have recently been convicted of two or more violations that relate to any properties used for short-term rental by the operator in the past three years. Violations could include noise, property standards, waste collection, fire code, and building code.
This means that between now and July, the city will make clear exactly how this process will take place, and what kind of proof operators will need to provide about short term rentals for the number of nights for this year (the one previous to the new regulations). The regulations are enforced by bylaw officers. Fines are set by the province and could be up to $100,000.
8. HOME SHARE AND LONGER SUBLET
You are allowed to share up to three rooms in your home for short-term periods (less than 28 days). You are not allowed to rent your secondary suite (an apartment in your home).
This means renting out a room in your house for less than 28 days is okay, but not if it was set up as a secondary suite with a fridge and stove. If you want to rent it, it needs to be for more than 28 days at a time.
9. COMPANIES NEED TO PAY $5000
Companies that provide an online service via the internet to facilitate a transaction between a renter and a home operator (Airbnb, VRBO) will need to obtain a municipal business licence for $5000 and pay $1 per night an operator rents (per transaction). Companies that provide listings, or real estate brokers that use other methods of connecting hosts and renters, will not need to obtain this licence.
This means that other companies can obtain a licence to provide similar types of services as those provided by Airbnb. Geo.tv reports that 65,000 people use Airbnb in Paris, while 35,000 use similar platforms.
10. COMPANIES/OTHERS THAT DON’T NEED TO PAY
The policy defines a short-term rental company as:
… any person in the business of facilitating or brokering bookings for short-term rentals via the internet and who:
- receives payment, compensation, or any other financial benefit as a result of a person making or completing bookings of those short-term rentals; or
- collects, accesses, or holds information on the number of nights that bookings of those short-term rentals are made or completed.
This definition does not apply to a person who facilitates or brokers bookings for a short-term rental owned by that person or his or her immediate family. “Person” includes multiple persons who act together to carry on the business of a short-term rental company, despite the fact that no single one of those persons carries on the activity in its entirety. Such persons shall be subject to the requirements and may be held jointly and severally responsible for each other’s actions.
This point is somewhat unclear, but suggests companies that list or broker in person are not required to get a licence. The extent to which this could create a loophole is unclear. “If they are operating in such a way as it meets the definition of what we are calling a short-term rental company, then yes, they will be required [to get a licence]. So a simple listing where that platform has no direct interaction with the host or the guest may not be subject to the regulation or to the licensing,” Cook said.