Short-Term Rental By-law: LPAT Hearing Update

September 18, 2019 | Jason Rivait

In late 2017, the City of Toronto (the “City”) approved recommendations to create a new zoning by-law regulating short-term rentals. The by-law was intended to take effect in June 2018 but was appealed at the Local Planning Appeal Tribunal (the “Tribunal”) and has yet to come into force.

The Short-Term Rental Bylaws

The key takeaways from City’s proposed changes are as follows:

  1. Short-term rental operators (being an owner or tenant) must register with the City and remit an annual registration fee;
  2. Short-term rental companies must obtain a license and remit an annual fee;
  3. Short-term rentals (being any rental that is less than 28 consecutive days) are only permitted in the principal residence of an owner or tenant;
  4. An operator (being an owner or tenant) may have only one principal residence; and
  5. Short-term rentals of an entire residence are limited to a maximum of 180 nights per calendar year.

The Tribunal Hearing

There are approximately 21,000 Airbnb listings in Toronto. As Airbnb’s popularity has grown, the issue of short-term rentals has become increasingly polarizing. Many people appreciate the cheap and available alternative accommodations offered by short-term rental providers, while others criticize misbehaved guests and the drain on long-term housing. Given the significant community interest, the Tribunal scheduled seven days of hearings beginning on August 26, 2019.

Arguments for Proposed Short-Term Rental By-law

The City claims the by-law is necessary for maintaining and improving the supply of residential accommodation. Proponents of the by-law argue that the restrictions are necessary to:

  • ensure the right mix of housing options;
  • prevent landlords from diverting housing stock away from long-term housing;
  • control rising rents; and
  • stabilize the supply of residential accommodation.

Proponents of the by-law also claim that short-term rental guests are a nuisance to long-term residents. Common complaints relate to excessive noise, garbage and parking. The by-law restricts a landlord from subjecting neighbours to misbehaved guests.

Professor David Wachsmuth, a McGill University researcher studying urban planning, appeared before the Tribunal. He predicts that many of the short-term accommodations will become available for long-term occupancy. He suggests that occasional hosts willing to rent out their principal residences can adequately supply the market for short-term accommodations.

Arguments against Proposed Short-Term Rental By-law

Opponents of the by-law argue that it is unfair to force owners to rent out their properties to long-term tenants. They argue that short-term rentals provide many benefits, including:

  • alternative accommodations for the undersupply of hotels;
  • a diversity in accommodations capable of satisfying different needs; and
  • responsible landlords with an incentive to maintain and improve their properties.

Opponents of the by-law also contend that short-term rental guests are overwhelmingly well behaved, with the vast majority of short-term bookings being incident-free. They argue that neighbours actually benefit from living nearby short-term listings since property owners have an incentive to improve and maintain their property to attract more guests.

Peter Thoma, founder of urbanMetrics, appeared before the Tribunal. He cautioned that Toronto has an undersupply of accommodations, which will worsen if the by-law takes effect. He testified that the supply of hotels cannot meet the anticipated growth of visitors to Toronto. He argued that Toronto needs short-term rentals to support its growing profile on the international stage.

Final Hearing Date

The final day of the hearing will likely be October 15, 2019. Soon thereafter, the Tribunal will deliver its decision.

Special thanks to Jeremie Lachance, who assisted with the preparation of this article.

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