Toronto to Require Short-Term Rental Licences

by | Jan 6, 2020 | Rental Property Management Tips

Toronto is moving forward with its plans to limit short-term rentals, including overnight vacation listings on Airbnb, to principal residences only.

The registration bylaw was passed in 2018, but enforcement was paused after a legal challenge brought by landlords of properties purchased solely for the purpose of renting short-term on sites like Airbnb. However, this past November, the Local Planning Appeal Tribunal ruled that Toronto lawmakers were within their rights to pass the bylaw.

The landlords opposing the regulation have appealed the LPAT’s decision, but city officials appear confident they will prevail, and are proceeding with the registration process, which is set to go into effect this spring.

Then, short-term rentals — under 28 days — will be limited to the host’s principal residence and to only those hosts who have obtained a licence.

Homeowners and tenants are eligible to apply for licences so long as the property is the host’s principal residence. For instance, a homeowner can apply for a licence for their residence, and a tenant in a secondary suite in that home can apply for their residence, but the homeowner cannot apply for a licence for the secondary suite.

Because the licensing process is not yet formalized, it is not clear whether tenants will be required to obtain the landlord’s consent to use portions or all of the rental property as a short-term sublet, an issue that was discussed during earlier deliberations. If there is no such restriction, it stands to reason that it would be up to the Landlord and Tenant Board to determine if a landlord can restrict a tenant from using the landlord’s property to generate income from short-term rentals over the landlord’s objection. It also stands to reason that any such restrictions would need to appear in the tenancy agreement.

The cost of the licence is $50 per year, along with a 4% tax on all short-term bookings.

The bylaw regulates the companies who list the properties. These companies will be required to include a registration number for easier enforcement and a method for removing unauthorized listings. A system also will be in place to investigate complaints lodged by neighbouring residents.

The intent of the bylaw is to push more rental inventory into the market for local residents. It is estimated that 5,000 rental units now committed on Airbnb will become available for long-term renters.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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