Toronto examining loophole in short-term rental rules

Toronto City Councillors are looking to close an unintended loophole in the city’s short-term rental rules, which govern companies like AirBnB, and have come under increasing scrutiny at City Hall.

“We definitely did not expect these loopholes, and I agree 100% we need to close them,” said Coun. Ana Bailao, who is chair of the city’s housing committee.

In question is whether property owners can hire other people to host their listings full-time, thereby skirting the rule that only primary residences can be rented out, and even then just for half the year.

“If somebody owns 10 condos in there hires somebody to be their property manager, at this point the interpretation that we’re getting from staff is that they’re out of the picture now,” said Coun. Paula Fletcher, Toronto-Danforth. “They can simply do that, it’s a way around the bylaw. Yet others are saying there is no way around the bylaw – it’s not legal to do that. I think we need to sort that one out. I think many of us have been frustrated. I get frustrated.”

In a motion put forth by Fletcher on Friday, Toronto’s Housing Committee asked City staff to look into whether there’s any obstacles to enforcing the rules in these cases, and to report back by April 27.

Toronto’s short-term rental rules came into effect in January 2021. Since then properties have had to have a license from the City to operate as a short-term rental. However, CityNews has observed that a single “host” on a rental website can have several licensed properties associated with their profiles. Fletcher alleges property owners are long-term renting their condos to a sub-host who is then sub-renting them to vacationers and others.

“There has been a lot of attention on ghost hotels and the fact that we cannot get a handle on ghost hotels,” Fletcher said. “When I go home on Dundas I can tell you there’s two big condo buildings that are essentially just ghost hotels. How do I know that? Because there’s Ubers outside and there’s people with luggage all the time. In and out, in and out.”

The city has seen a steep decline in the number of listings on short-term rental websites since January 2021. A report by City housing staff just months into the new regime says that in early 2020, there were more than 15,000 short-term rentals in Toronto, with 8,300 of those being full-time. With the effects of the rules and the freeze on tourism brought on by the pandemic, the number of dedicated short-term rentals fell to just 3,100. The report indicates that in January 2021, AirBnB alone removed more than 2,600 listings that didn’t comply with the new rules, and shifted others to only be available for month-long stays.

In 2020, before the City’s rules came into place, the research indicated that about one-third of short-term rentals were being run by operators running multiple listings.

Fletcher says she worries that some of that activity may not have stopped under the new regime.

“If that’s how [people] are getting around the bylaw, we need to know about it, and we need to deal with it, because it was never anticipated when we set this up.”

International students ‘prey’ to short-term rental schemes: Wong-Tam

Council has also directed city staff to look into rentals lasting 30 days or more, as well as those marketed to international students.

“I’m getting really hot under the collar because it’s been such an upsetting situation to uncover in our ward,” said Toronto-Centre Councillor Kristyn Wong-Tam, adding she believes the situation is happening in other areas of the city as well.

“What I’m hearing is really harmful effects to students, in this case international students,” she explained. “They are so new to the city, they don’t have family here, they don’t have a lot of resources, and they are being preyed upon,”

She said third-party companies with websites that appear legitimate are working through the same short-term rental loopholes. She says they act as middlemen between students and property owners, renting accommodations in apartment buildings or condominiums, for 30-day or four-month leases. When the lease is up, the cost to renew increases.

“What we’ve heard now is sometimes the rent goes up 25% or greater, or there’s a request for an international students to move out,” said Wong-Tam.  “Their families are spending a lot of money to send them to our city to get a prestigious international education and they are becoming prey.”