Short-term rental companies including Airbnb could possible be facing a proposed licensing system that would decrease the amount of properties they are capable of listing, as Toronto proposes a brand new system focusing on housing affordability within the city.

With the rapid growth of short-term rental websites, including listings that are generally not the owner's primary residence, the recommendations have been made in order to lessen the impact on neighbourhoods, condo living, housing affordability, tourism and taxation. However, with these recommendations, the proposed rules do not prevent condo boards from banning short-term rentals all together.

The proposed system released on Monday, includes a licensing and registration system that restricts short-term rentals to a person's primary residence, as reported previously in an article by The Star.

Essentially, short-term rentals that are not an individual's primary residence would be banned, in order to free up some property that can be utilized as long-term housing. Residents would be required to do the following when renting out their home:

  • Register with the city
  • Pay fees
  • Provide safety and emergency information

In addition, short-term rental companies would be subject to the following:

  • Remove any problem listings
  • Pay licensing fees

A rental tax of 10 per cent is also being considered, however Airbnb is arguing that they should be paying the same rate as hotels which sits at 4 per cent. Toronto is not the first city to think of implementing regulations, however, it is becoming a concern for Toronto in the midst of their efforts to cool down the housing market.

Airbnb has an idea of the amount of hosts that share their primary residence, which stands at more than 80 per cent, meaning about 7,600 properties would be able to continue operating, while around 3,200 would be ineligible, based off of last year's rental data.

For more information on the release of the proposed regulations, stay tuned to Monday's executive committee agenda taking place ahead of the monthly meeting next week.

See more about Airbnb here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.