AirBn-Bye: Using Municipal Legislation to Repair the Rental and Housing MarketAs we have observed throughout our recent discussions, the current state of the Canadian housing rental market has left both legislators and Canadians feeling desperate. We've heard various suggestions from the government, including the proposal that ordinary homeowners open their homes to renters as a means to assist both parties. With the rise of Airbnb and homeowners earning extra income from short-term rentals, legislators are now questioning whether this sector can contribute to alleviating the housing crisis.As always, our articles are intended to stimulate discussion and creative thinking regarding the pressing issues that currently influence home ownership, property management, and the real estate markets. The rental and housing markets, along with the regulations governing them, are complex. Before taking any specific action, we urge you to consult with a qualified real estate professional, a tax expert, and your legal counsel.According to the Ontario Municipal Act, cities possess the authority to regulate short-term rentals. This implies that each individual municipality will establish its own rules concerning zoning, licensing, noise, safety, taxation, and related matters. As an example, we can examine the City of Toronto's regulations on short-term rentals. When users browse the "Short-Term Rental Operators/Hosts" page on the City of Toronto's website, they'll notice a note that states, "the city is evaluating the implementation of the short-term rental bylaw to assess its progress and identify areas for improvement." They also mention an open survey and consultation period from October 17th to the 24th, indicating that Toronto is in the process of amending the bylaw, possibly in light of housing initiatives. (Please refer to Toronto's official website for more information.)Toronto's website specifies that short-term rentals are defined as rentals "for a period of less than 28 consecutive days." This rule encompasses B&amp;Bs but excludes hotels and motels. It is further clarified that short-term rentals must occur in the renter's principal residence, which should be the property where they reside and pay their bills. If the entire house, a dedicated investment property, or more than three bedrooms are being rented, the maximum number of nights allowed under the short-term rules is 180 per year. To become a short-term renter, one must register with the city and pay a registration fee of $53.22. A registration number, to be included in listings, will be provided. Additionally, a 6% Municipal Accommodation Tax must be paid quarterly. Platforms facilitating rentals, such as Airbnb and Booking.com, are also required to register with the City and fulfill the necessary fee obligations.The impact of the short-term rental industry is likely to vary for different municipalities. Historically, it has been the prerogative of individual municipalities to impose restrictions on this practice. The essence is that municipalities evaluate the effects, both positive and negative, of the practice on their local communities and have the authority to take action as needed. Cities in Northern Ontario have been monitoring the effects of short-term rentals. According to CBC, this past summer served as a test run for new restrictions on short-term rentals. The Mayor of French River expressed concern about people from outside the region, typically from Southern Ontario, capitalizing on the area's tourism industry from afar while having no accountability to the local community. This isn't an idle comment; they are actively considering their options.Nova Scotia has recently introduced several amendments in an effort to make space available for long-term housing. Some of these changes involve higher registration fees for short-term rentals and stiffer penalties for violating short-term rental regulations. It is noteworthy that these changes came after the province became the sixth in Canada, albeit temporarily, to introduce rent controls. (These controls were introduced to manage the Covid-19 crisis and are scheduled to expire in 2025. One territory, the Yukon, also has a form of rent control.) Similar to Nova Scotia, Ontario has also grappled with a housing affordability and supply crisis that could potentially be alleviated through limitations on short-term rentals.The notion is that more municipalities across the province of Ontario will exercise their legislatively mandated authority to impose limitations on short-term rentals to prioritize housing for ordinary Ontarians over catering to tourism or other motivations. For better or worse, we could potentially see this approach extend across Canada as well.

AirBn-Bye or Using Municipal Legislation to Repair Housing Market in 2023

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