In December 2017, Toronto announced it was slapping new rules on Airbnb rentals across the city. The decision sparked outrage amongst many landlords, but what’s the long-term impact on the property market? We’re going to analyze the effects on real estate.
What Are The New Rules?
The new rules stipulate that landlords in Toronto are only allowed to rent out their primary residences on sites like Airbnb. The city also prohibited listing secondary suites like basement apartments online, and the maximum rental period cannot exceed 180 days.
These regulations came into effect on July 1st, 2018, and city council members also created a registry of all landlords that offer short-term rentals. This record requires all landlords to declare their primary residence and pay an annual membership fee of $50.
The Projected Impact
According to recent figures, there are more than 10,000 Airbnb rentals in Toronto, mainly scattered around the downtown area. These rental units serve as an economic stimulus for landlords, bringing in millions of dollars each year, especially during the peak tourist season.
So many critics view these new regulations as a loss of revenue. Some homeowners also argue that Airbnb rentals helped subsidize their monthly mortgage payment as well, meaning some individuals will be cash-strapped following the decision.
How Have Other Cities Reacted?
In June of this year, The Telegraph released a detailed report entitled “How the world is going to war with Airbnb.” The article details how major cities across the globe are reacting to these Airbnb-esque services that provide short-term rentals.
For example, Japan is the latest country that passed a new law that requires all short-term rentals to follow to the same safety rules as hotels. This forced Airbnb to remove thousands of listings and refund reservations in the interim until all locations adhere to the new standards.
In the Balearic Islands in the Mediterranean, the local government has enacted strict laws surrounding short-term rentals. If a landlord is caught advertising a property that isn’t registered with the state, the individual could be fined up to €300,000 (or roughly $350,00). This has had a profound impact on tourism on the islands of Palma and Ibiza, causing a spike in the price of short-term rentals.
Toronto is the latest city to react to the Airbnb craze. While this probably will stunt short-term rentals for a brief period, it won’t prevent the growth and popularity of these platforms. For more information about the property landscape in Toronto, explore realestatenewsintoronto.ca.