Are You Ready for the New Airbnb Restrictions?


Over the past few years there has been a lot of talk on the streets of metropolitan cities such as Vancouver, Toronto and New York, to name a few, that short-term rentals (including Airbnbs) are to be severely regulated and restricted. Now the gossip has turned to cold hard fact. So, here’s what you need to know.

What’s it all about?

For some time now, cities across Canada and the USA have been calling for a clamp down on short-term rentals, particularly those facilitated by platforms catering to daily rentals such as Airbnb and VRBO.

The concerns that have been voiced are many and varied. Hotels maintain that Airbnbs are decimating their business, and are at an unfair advantage because they don’t have to adhere to the same regulatory standards. Those who live near short term rentals claim it’s alarming to have a constant turnover of new neighbours. And campaigners for affordable housing say it’s skewing the housing market.

The latter is perhaps the biggest headache for provincial governments. The argument is that short-term rentals are effectively blocking off residential suites that would otherwise be used by long-term renters, or buyers. The result is that the amount of accommodation available for locals has been squeezed, reducing access to affordable housing and driving up rental rates.

Certainly the numbers cannot be denied. The vacancy rates for rentals in Toronto and Vancouver are hovering below 1%. A recent report also concluded that Toronto and Vancouver are the most expensive places to rent in Canada respectively. According to the report, a one bedroom apartment in Toronto will set you back an average of $2,020 per month, while in Vancouver this figure is closer to $1,990.

Canada isn’t the only country to be facing this problem, and across the globe, cities have been scratching their heads, wondering how to deal with the consequences of a rapidly growing Airbnb market.

Some have been quicker to act than others. One example is New York City, where rentals shorter than 30 days have been illegal since 2016 if the owner or tenant isn’t present. And the penalty for breaking this law? A cool US$7,500.

The province of Quebec also implement restrictions back in April 2016 – the first of its kind in Canada. Those offering rentals shorter than 31 consecutive days in the province now have to obtain a classification certificate from Tourisme Québec. This move paved the way for change, and this year, both Vancouver and Toronto will be following suit.

What’s changing?

So, what’s actually changing, and when?

The first major date for your diary is April 1 2018, when it will become illegal in Vancouver to rent out an entire house or apartment for less than one month, if it’s not the host’s primary residence. Short-term rentals of basement suites will also be banned. Hosts will have to obtain an annual business licence, and display this licence number on any online listings. However, hosts can rent out part of their home, or rent out the entire suite if they are away on vacation.

Similar restrictions to rentals of less than 28 days will come into force in Toronto a couple of months later. According to City of Toronto website, the key points of the new rules are as follows:

  • People can host short-term rentals in their principal residence only
  • People can rent up to three bedrooms or an entire residence
  • An entire home can be rented as a short-term rental if the owner/tenant is away – to a maximum of 180 nights per year
  • People who rent their homes short term must register with the City and pay $50
  • Companies such as Airbnb must become licensed and pay a fee of $5,000, plus $1/per night booked through the platform

Zoning bylaws

There will be financial penalties imposed for those who fail to comply with the new regulations. Even if this does happen, it won’t be the first time an Airbnb owner has had a run-in with the law, as some hosts have already been charged with zoning bylaw violations.

Zoning bylaws exist in both Toronto and Vancouver, and state what an area of land can be used for. So if a property is permitted only for residential use, rather than commercial purposes, it may fall foul of the law if used as a short-term rental.

Toronto has had a couple of legal cases involving Airbnb and zoning violations. The first involved a property on Glenelia Avenue, where licensing inspectors visited the property and found a couple were renting it for four nights, when an old bylaw determined that it must be rented for at least seven days. Another related to three properties on Bleeker Street, although charges were dropped against the owners, on the condition they stop renting the suites for less than 30 days at a time.

Are you ready for the new regulations?

Undoubtedly these laws are big news, and the restrictions on short-term rentals in Vancouver and Toronto are significantly changing the rental market. This has been clear to see for the team at Rent it Furnished, not least because as Airbnb rentals are shutting down, more clients are coming to us, asking us to rent their furnished suites legally.

Erika Weimer, President of Rent it Furnished, offered some advice: “The highest return you will get from your rental will always be short-term furnished, but there’s a right way to do that, and that’s what we specialize in. We are working with owners who are dealing with the fallout from these new regulations and we are helping to change their business model.”

“Owners have to accept that these restrictions and penalties are in place, and no amount of lobbying will change the fact that houses are just not zoned for hotel or commercial use. It’s all about adapting your strategy.”

When asked how Airbnbs and other short-term rentals have affected the sale of investment property in Vancouver, Erika said: “there have definitely been changes to the Vancouver investment real estate market as some investors are looking to sell rental units that were purchased based on a daily rental rate revenue model that is no longer sustainable.”

RIF has been servicing the rental industry since 2009 and has recently launched an Investment Real Estate Division. We offer a unique team-based consultative approach where a licensed leasing agent and a property manager work with buyers to ensure they truly understand the rental market and the ROI a prospective investment purchase will bring.

“We feel investing is a team effort and understanding the rental market is absolutely vital for our investment buyers,” Erika added.

Let the experts help

If the upcoming changes mean that you need to take your property off of short-term rental sites, Rent it Furnished provides a legal option to rent your property, furnished. We operate out of Vancouver, Toronto and Montreal, and can help you create a legally compliant strategy that is financially viable, obtaining long-term or short-term tenants on your behalf.

Or if you want to purchase or sell investment property – perhaps because your current model is no longer working for you – our Vancouver real estate investment team can help. Simply contact us to find out more.

Written by Lottie Laken

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