Short-Term Rentals Vanish into Thin Air
By: Sebastian Marquez| Tolobi
Before the pandemic, the debate over AirBnBs and other short-term rentals in Toronto was highly contested. Now it seems nature’s taken its own course of action and done something nobody could’ve expected.
Pre-pandemic measures
Just when regulations on short-term rentals became tighter than ever, a pandemic strikes. Before COVID-19 shut down Toronto and the rest of Canada, the city had already set in place numerous measures to limit the impact of AirBnB and other similar services on the long-term rental market.
Basement suites became harder to put up on AirBnB, a one-time license fee of $5 000 was implemented on short-term rental companies, and the city pulled out extra fees and taxes for short-term rental operators. Short-term rentals became only legal in a landlord’s principal residence, and only for 180 nights a year, with homeowners being able to rent up to 3 bedrooms in their homes on a short-term basis.
The general sentiment of Toronto residents — like residents of similar cities facing affordability issues around the world — seemed to support these regulations targeting AirBnb. Based on the new parameters, the city’s Local Planning Appeal Tribunal (LPAT) estimated that these changes would return up to 5 000 of Toronto’s more than 21 000 AirBnB units back to the long-term residential market.
AirBnBs converted to long-term rental
Once COVID-19 began to grab the headlines, many residents began to speak of their fears of sharing their AirBnB-laden apartment buildings with visitors from abroad. On March 28, the board of directors of 300 Front St. — long considered one of Toronto’s “most notorious ghost hotels” — sent a notice to owners banning short-term rental units from operating during the pandemic.
According to the real estate consultancy Urbanation, Toronto saw a year-over-year 29% spike in the number of furnished, long-term apartment rentals available during just the first quarter of 2020. As these units were likely meant for the tech-driven short-term rental market, it’s likely many of them will be carried over to internet listing sites, classifieds, and social media platforms for long-term rentals. On Tolobi, we’ve seen a spike in new landlords and realtors engaging in our Rental Assistance services to rent out their furnished units since the city’s isolation measures took effect. And with the influx of furnished units has led to an overall decrease in rental prices in Toronto, with the average monthly rent decreasing by 0.7% year-over-year.
What about the hosts?
As a measure of goodwill to its users, AirBnB has offered full refunds for cancellations of reservations booked prior to March 15, overriding policies set by individual AirBnB hosts.
And while AirBnB lays off nearly a quarter of their company — close to 2 000 people — countless AirBnB hosts have expressed their frustrations with the company as many have yet to receive any payments from the $250 million coronavirus relief fund announced by the company earlier this year. Many also have raised complaints that the company policy of offering 25% of what they normally would have received under their cancellation policies as inadequate for helping them through the crisis.
And given the history of heated debates over the presence of short-term rentals in increasingly unaffordable urban centres, it’s not surprising that the public perception towards AirBnB hosts during COVID-19 have not been particularly sympathetic. And though AirBnB seeks the Canadian federal government for handouts “regular Canadians who share their homes to earn extra incomes,” many argue that their cause is undeserving of federal aid. Thorben Wieditz of Fairbnb Canada, an advocacy group that has long called on stricter regulations on short-term rentals, says AirBnB hosts do not pay their fair share in taxes — especially compared to hotel operators — nor does the company itself pay Canadian corporate taxes.
Regardless of when the city and country is expected to recover, there will be a recovery and a move back to normal. The question is, what will the new normal look like? Will more condo buildings have restrictions on short-term rentals, or will there be a mad flurry of N12 notices as owners try to move their units from long-term leases back to the more lucrative short-term rental market?
