How The New AirBnB Rules Will Affect Property Owners
Legislation for short-term rentals in Ontario have been a growing concern over the past few years. Usage has been increasing as a means of profit more and more; renewing the laws was an inevitability. A short-term rental, like AirBnB or what Expedia and Trip Advisor offer, is where a person’s home or apartment is rented out for a brief period to a third-party for a specified amount of days, like you would a hotel.
The proposed new ruling is that owners can only rent out the home 180 days of the year, has to be no longer than 27 days at a time, an additional 4% Municipal Accommodations Tax will be added and the property must be the primary residence of the owner. This will also require hosts to register and get a license. Currently, you can put your home on these platforms with no paperwork or license.
The proposed legislation will be determined in December, these changes will not affect individuals who rent out their sole property. The idea behind this is to make housing more accessible to residents, which would bring about 5,000 units in the city of Toronto to utilize as tenant use. This is just a blip in the market, which wouldn’t influence values with our less than 1% housing vacancy rate.
In an interview with REC, Alec Dekirmendjian of TurnKey Equity, a company which provides short-term rentals to clients, stated his lack of concern with this proposed legislation. This would allow less time for these individual properties to be on the market by half, but would increase values of short-term rentals, as with less supply and increasing demand within the city would occur. “The prices would most likely go back to where they were 2 years ago where we had less people on the market utilizing this through having less product within the city. The people that stick with it will have the option to make the same, if not more. We just need to find different avenues of attacking the 28 night [maximum].”
The proposed change would affect the return on investment of those who have bought multiple properties for the use of short-term rentals. They would have to change their strategy through having long-term tenants, rather than frequent temporary residents, since only the principle residence is allowed to be rented out. These new laws are being fought by these hosting companies as it does influence their bottomline. If it does go through it still has the chance of being appealed. If it is put into place it will most likely be within 6 months to a year until it does influence their business. For anyone with the desire to own multiple short-term rental properties, it would be best to wait until everything is finalized. Any investor won’t have issue finding tenants, but this will effect the income of those who planned on utilizing that strategy.