Frustrated over delay in rules for Toronto Airbnbs? Oakville’s attempt to regulate short-term rentals shows it’s not so easy

Thestar.com
February 4, 2020
Tess Kalinowski

Toronto politicians and residents frustrated by the delay in regulating the city’s short-term rentals need look only as far as Oakville to see the complexities of restricting operations of online accommodation platforms such as Airbnb.

The renewed calls for a clampdown on short-term rentals used as party houses come after Friday night’s fatal shooting of three people in a downtown condo. Of particular concern are homes rented by landlords who don’t live there and are simply operating them as de facto hotels.

The uproar has sparked fresh questions about the corporate citizenship of rental platforms -- not just Airbnb, but Expedia, VRBO and others.

Oakville passed its short-term rental regulation in March 2018. Like Toronto, it confined short-term rentals to the principal residence of the landlord. It is ahead of Toronto in delivering letters to landlords informing them they are required to pay an annual $237 licence fee and informing online rental operators of a $44,500 charge -- money designed to cover Oakville’s enforcement costs.

While some operators have moved out of the short-term market there, Airbnb continues to advertise Oakville rentals. There were more than 300 on its site on Monday. But it has yet to pay the registration fee making its operation there illegal from the town’s perspective.

“They don’t have a licence to operate so I would say they are operating in violation of the licensing bylaw,” said Jim Barry, director of municipal licensing.

Oakville’s licensing fee looks to be among the highest in North America. But Barry says that may not be accurate given many larger municipalities, including Toronto, have additional nightly rental fees in their systems.

Still, the town is now reconsidering its short-term fee structure and Airbnb’s objections are “a factor” in what Barry described as a broader licensing fee review that will go before council in the spring.

He says Airbnb has been “adamant” that it opposes the fee structure.

A spokesperson for the company would only say, “We are currently in discussions with the Town of Oakville regarding their regulatory framework.”

Barry stressed that Oakville was taking a progressive approach to short-term rental enforcement and “didn’t want to rush into charges or going to court.”

“The best outcome for residents and businesses in the area is if we can figure out how this licensing program works and provides the necessary health and safety, consumer protection, nuisance control for the residents while being reasonable for the businesses involved,” he said.

In Toronto, where it is believed Airbnb alone has more than 20,000 listings, the online companies will have to pay a one-time $5,000 licence fee and an ongoing $1 for every night booked.

Toronto’s short-term rental enforcement may not be happening fast enough for some but the city is working aggressively to get its licensing and enforcement in action, said Carleton Grant, executive director of Municipal Licensing and Standards.

He said it would have been unwise to move ahead during the provincial Local Planning Appeal Tribunal (LPAT). But now that the decision has favoured the city, another attempt to appeal the bylaw through the courts won’t slow the process down.

Still, it will be at least the fall before the system is up and running. It’s a huge undertaking, Grant said. The technology the city looked at two years ago is already out of date.

“This is really transitioning to a new regulatory regime where people have been renting out their places going back years,” Grant said.

“We will not sacrifice accuracy for speed. When we do things too quickly we make a ton of mistakes and then it’s not enforceable,” he said.

Fairbnb, a pro-regulation coalition, maintains that it is already illegal for landlords to rent properties that aren’t their principal residences. Spokesperson Thorben Wieditz says the rental platform operators, including Airbnb, are bad corporate citizens.

“Around the world we have seen many times over that municipalities come up with rules and regulations and Airbnb is doing everything they can to either drag out regulations, to avoid playing by the rules or to sue municipalities and government every time rules are being put in place that cut into the business model. Their business model is to operate in legal grey zones. Their business model relies on the wholesale conversion of residential housing stock into hotels. They know exactly what that does to residential communities and city fabrics,” he said.

Business professor William Mitchell of the Rotman School of Management at the University of Toronto says that violent incidents like the one seen on the weekend are not the rental platform’s fault.

“We certainly had violent incidents in Toronto long before Airbnb and we continue to have violent incidents that have nothing to do with Airbnb,” he said.

It is in Airbnb’s interest to keep its business model robust and it has found a market, Mitchell said. But he added he can’t see how the company can ban party houses.

“For them sitting in California trying to enforce a party house ban in Toronto seems a little challenging,” he said.

A timeline of Toronto short-term rental rules

Dec. 5, 2017: Toronto City Council adopts a zoning bylaw to regulate short-term rentals with implementation set to begin in June 2018.

January 2018: Landlords appeal the city’s bylaw to the Local Planning Appeal Tribunal (LPAT).

Nov. 4, 2019: Airbnb bans party houses on its platform.

Nov. 18, 2019: LPAT rules in favour of Toronto’s short-term rental bylaw.

Dec. 3, 2019: Jason Cherniak, the lawyer representing seven short-term rental landlords, announces a court application that would allow another appeal of the LPAT decision. That application is expected to be heard next month.

Spring 2020: Toronto will begin licensing short-term rental companies and registering individual operators. They will have three months to register.

Summer 2020: Short-term rental operators will be required to be registered with the city and pay a quarterly four per cent a Municipal Accommodation Tax.