Basement apartment owners unhappy with city ban on Airbnb-like rentals
Owners of basement apartments and investment properties face exclusion from Airbnb under new city rules designed to limit the impact of these on Toronto’s housing supply.

TheStar.com
Dec. 8, 2017
David Rider

Maria Nunes is “devastated” Toronto’s short-term rental rules will make it illegal for her to continue offering her basement apartment on Airbnb.

“I feel like I’m living in Stalinist Russia!,” Nunes wrote the Star in an email Friday as she and 700 other secondary suite owners on the rental platform processed city council’s decision to go against city staff advice and outlaw such suites as short-term rentals.

Nunes, 55, spent a small fortune turning her Parkdale basement into a well-appointed apartment, expecting to put it out for long-term rental.

After a friend suggested she, instead, try Airbnb, she quickly realized the 30-per-cent premium she could earn that way would help pay off a renovation gone wrong. Keeping the unit pristine and greeting international guests is a lot of work, but it perfectly fits the part-time video editor’s lifestyle.

“Why does the city think it has the right to tell me who can live in it with me just because it’s a separate unit? . . . . It’s my pension,” she wrote. “I might just not want to live in Toronto if it’s going the way of a totalitarian state.”

Like Nunes, Edward Byers is trying to figure out what he’ll do when his basement apartment has to come off Airbnb July 1, when new rules take effect.

“We just had a baby and that apartment helps pay the mortgage, and I can keep it open for my parents when they visit from Kingston for a couple of nights every three weeks,” the Weston homeowner said.

“Personally, I don’t know what we’ll do, maybe long-term renting. The sad part is I really like hosting; I have two people from China here now and just had a man from an India for a month. I helped him get a Presto card and find an apartment.”

Landlords have always offered short-term stays of one kind or another, but the emergence of San Francisco-based Airbnb, and similar online booking platforms, dramatically boosted their popularity, turning some buildings into “ghost hotels” and sparking fears for Toronto’s long-term-rental stock.

Most of council’s day-long debate focused on self-contained secondary suites with their own kitchen and toilet facilities.

Licensing staff said owners should be able to rent such suites short term — less than 28 days — and a minority of the 45 council members agreed.

Most sided, however, with Councillor Ana Bailao, council’s housing advocate. She argued Toronto is in an affordable-housing crisis and can’t risk long-term basement and attic apartments for low-income Torontonians being converted into pit-stops for nightly visitors, however lucrative it is for the property owners.

The director of the city’s affordable housing office warned an exodus of low-cost apartments from long-term rental could see tenants evicted and maybe even forced into the city’s system of homeless shelters, which are crowded.

The city will create a registry of short-term hosts who pay an annual $50-city-fee and keep detailed records for inspection. Booking companies will pay a $5,000-licence-fee and $1 per night for each booking, and have policies to deal with noisy or disruptive visitors and to remove unregistered hosts.

Owners can rent out up to three rooms for as much of the year as they like, or their whole house for up to 180 nights per year.

Council decreed owners can short-term rent out only their “primary residence”, and not investment condos or homes, and toughened enforcement with a requirement hosts prove residency with government-issued identification.

Mark Dellamano, is president and owner of NOTL Vacation Rentals, which has a rental service and acts as property manager for owners of some downtown Toronto houses, many of them investment properties that could be kicked off Airbnb July 1.

“We do have people who are going to have either stop (short-term rentals) or see if they can figure out another way to get around it,” he said. “It’s going to be scary for a lot of people and these homes wouldn’t help the affordable housing situation anyway.”

Dellamano said a three-bedroom house at Yonge and Wellesley Sts. that rents for $2,000 to $2,500 per month can earn $6,000 a month on Airbnb. To get that, his company makes the units look “fantastic” and greet guests who like to be able to have up to six people stay and to cook their own meals.

Zachary Mandlowitz, president of Home-Sharing Service Providers, said a sizable portion of short-term rentals he oversees would run afoul of Toronto’s primary residency requirements.

Some owners could take a financial hit and move units to long-term rentals, while others “might look at enforcement,” he said, noting there are tens of thousands of Airbnb listings in New York City despite a crackdown.

“Investors will have to decide if they are comfortable operating in a black market, as we have seen in many North American cities, or not,” he said.

At city council, a city staff person noted one way around the secondary suite ban would be to remove the kitchen or bathroom facilities which, according to city definitions, would turn them into a room in the house, and not a suite, and, so, they would be eligible for Airbnb.

As some Torontonians expressed consternation at council’s preference for tight controls, others heaved a sigh of relief.

“We’re really pleased with the result; it feels like a good balance and gets most of what we wanted,” said Dominique Russell, chair of Friends of Kensington Market. “People buying up houses in order to create ghost hotels has huge impact on the fabric of our neighbourhoods. There have always been short-term rentals, but controls are good.”

Geordie Dent of the Federation of Metro Tenants’ Associations estimates the new rules could bring 3,200 units back to the long-term rental market.

“We’re pretty ecstatic; Airbnb has ravaged (rental) markets in places like Berlin and San Francisco, and we were really worried Toronto would suffer the same fate if we didn’t get ahead of it,” he said.

“Now we’ve got to make sure the city enforces the rules.”