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A new set of regulations for short term rental spaces, such as Airbnb, has been approved by Toronto’s city council.

One of the biggest changes is that basement apartments have now been banned from use as a rental space, leaving many potential landlords who use Airbnb to make some extra cash out in the cold. By limiting guests to people’s primary residences, the city hopes to have better insight into the current housing situation in the city. It also allows more of these suites to be available for long-term contract rentals. One of the new regulations states that only long-term tenants of secondary suites, not the owner, could offer up space for nightly rental.

This step will mean that families who take part in home sharing will now be regulated and formally recognized. Alex Dagg, the policy director for Airbnb Canada said, “This is truly a big step forward for the City of Toronto, in terms of supporting the fact that we have thousands of families in Toronto who have been home-sharing and are now going to be formally recognized and regulated. We look forward to working with the city on the next steps.”

Short term home-sharing hosts will now pay the city $50 per-year for a rental maximum of three rooms, which will be rented for no more than 180 nights per year. The unpredictability of the current housing market in Toronto, along with fluctuating costs, could mean there will be more short-term rentals and less room for long- term tenants.

Those fighting to include secondary suites argued these rules put many homeowners at a disadvantage and they should be allowed flexibility in the choice of renting out spaces they choose. Toronto Mayor John Tory voted in support of the regulations, saying that City Council had the responsibility to put reasonable limits on property use.

Airbnb, which is a San-Francisco-based company that allows users to book home-sharing services online, said that in the past year there were over four million Canadians that have used this service to travel domestically. Earlier this year as part of the government’s pre-budget process, Airbnb sent a letter to the House of Commons finance committee asking the government not to over regulate. This request was unrelated to Toronto’s new regulatory process. So far, the regulations seem to be pleasing to both the government and Airbnb.

The government is set to revisit the rules in 2019 as this will provide a timeline in order to observe any major changes to Toronto housing.

What do you think about these new regulations? Comment below.

Next week’s executive committee meeting is gearing up to discuss sweeping changes to housing in Toronto.

Mayor John Tory recently proposed phasing out the vacant commercial and industrial tax rebate program that gives businesses that are sitting empty a tax rebate. The tax rebate program, which has been in place since 2001 offers unoccupied commercial properties a 30 per cent tax rebate and industrial properties get 35 per cent. The program requires owners to try and rent the space, but does not provide a time limit on how long a business owner can receive the rebate. A city report revealed the program has given more than $367 million in subsidies to property owners, much-needed revenue that could be better spent elsewhere.

The proposal that will be discussed at next week’s meeting recommends the city lower the tax incentive to 15 per cent, beginning on July 1, 2017 to June 20, 2018, and then permanently shut down the rebate program on July 1, 2018. The report also recommended the rebate expenditures be reinvested in job growth programs and the poverty reduction strategy. This decision has been widely embraced by the city because poverty reduction is in dire need of funds in Toronto, and promoting businesses to stay empty is bad business after all. The rebate program has been criticized in the past because it allowed property owners to sit on their vacant stores while the value of the location increased. This has left several stores empty and little available business real estate in Toronto.

The executive committee also plans to focus on rental affordability in Toronto. Recently the province has put forward a bill on rental control, and has indicated that municipalities will be able to implement it at will. City council is moving forward with this initiative and will discuss how to implement rental control with a specific provision to have the rent control tied to the unit and not the tenant. There will also be an update on inclusionary zoning and laneway suites in Toronto.

The city is taking sweeping steps to respond to the high-pressure housing crisis in Toronto. By removing the tax rebate to empty businesses, it incentivizes business owners to fill their storefronts and reallocates much-needed funds to poverty reduction. Moving forward with rent control, inclusionary zoning and changing the regulations around laneway housing are all necessary to make Toronto a more liveable city. The outcome of the meeting will be interesting indeed, and will set up for a sure-to-be exciting May City Council.

rental

New Airbnb regulations for the City of Toronto

Toronto to end commercial tax rebate, adopt rent control