Isabella Diez, Director of Operations
At the end of 2020, the City of Toronto announced a new set of restrictions for short-term rental operators. As a result, the landscape for short-term rentals has changed drastically forcing many operators to sell their properties.
Short-term rentals were banned temporarily, as a part of COVID-19 restrictions in April of 2020. With this change, many major cities saw a transition towards long-term rentals, and consequently the market was drastically impacted. These severe restrictions were then lifted in June allowing for short-rentals to resume.
New regulations required short-term rental operators, listing homes or rooms for periods of less than 28 consecutive days, to be registered with the City of Toronto by December 31, 2020. This was mandatory in order for property owners to continue short-term renting in Toronto in 2021.
Additional restrictions on short term rentals began on January 1, 2021. These new restrictions limit property owners to being able to rent out only their primary residence, the residence which property owners list on bills, taxes, and insurance. These restrictions were implemented in order to eliminate ghost hotels whereby operators own multiple properties in which they do not permanently reside. The city of Toronto has stated that they plan to strictly enforce these new regulations. Those found not abiding by these new restrictions may face fines up to $100,000.
These changes were not solely a result of the effects of the pandemic. In fact, for the past few years, FairBnB, an advocacy organization, has been lobbying for more restrictions on short term rentals, especially in Toronto, in reaction to ever increasing rental prices and the growing scarcity of permanent housing. The excessive number of Airbnb listings have limited the number of condos available in Toronto. In reaction to this trend, in early 2020, ICE Condos removed the ability for Airbnb to list rentals in their buildings.
The market most impacted by these new regulations has been apartments in highrise buildings which are popular for Airbnb rentals. Many operators have rushed to sell their properties knowing that they would not be able to continue to make a profit in the upcoming months or even years. Consequently, the market has been flooded with units for sale.
With these new restrictions being implemented, Vrbo has decided to withdraw listings of their short-term rentals in Toronto. The Airbnb competitor had more than 300 houses, apartments, and condos offered in Toronto. This decision was made due in part to the complete shutdown of short-term rentals in 2020 as well as the increased restrictions implemented within the past month. Airbnb is now the sole licensed provider of short term rentals in Toronto.
Toronto, considered to be among the top 10 biggest rental revenue cities in the world, is experiencing a market shift such that the future health of short-term rentals in Toronto now remains to be seen.