Understand the rules governing short-term rentals
June 21, 2019
With vacancy rates down to 1.1 per cent in Toronto and 1.8 per cent across Ontario many residents are pointing their fingers at short-term rental properties as the cause. Property owners are renting out houses, rooms or entire units for short periods (less than 28 days) in growing numbers across the city, facilitated by online platforms. So before you sign-up to use, list or buy, make sure you understand the rules and regulations governing short-term rentals in your area.
ZONING
One of the things that could become very sticky, particularly if you are considering renting out afreehold lowrise, may be zoning. The renting of a house or rooms therein may be contrary to the zoning by-law where the home is located. Let’s say the party gets loud and the neighbours complain to the police and to the zoning office of the City. As the owner, you are liable and this could result in significant fines or worse. Advice: You should review your municipal by-laws, as individual municipalities in Ontario may have differing by-laws prohibiting or limiting short-term rentals before you post the house online.
On December 7, 2017, and January 31, 2018, Toronto City Council approved the regulation of short-term rentals in Toronto. The new rules require short-term rental companies to obtain a licence and short-term rental operators to register with the City and pay a Municipal Accommodation Tax (MAT) of four per cent. However, the City’s decision has been appealed and will not come into force until after the appeal decision is reached, likely later this summer.
ISSUES IN CONDOMINIUMS
Short-term rentals can sometimes lead to problems in condo communities, as people renting condos may be disruptive to other residents and may not follow the condo rules.
Frequent examples of disputes include:
- Renters causing issues within the building;
- Restrictions and/or prohibitions in the condo’s declaration or rules against it;
- An owner or resident was originally told they could host short-term rentals, but the board has since changed the rule;
- There is a security concern about residents sharing keys with short-term rental tenants.
How do you avoid these issues? If you are considering using your condo for short-term rentals, you should first review your condo corporation’s declaration, by-laws, and rules. A declaration and/or rules can include conditions or restrictions on the occupation and use of the units. For example, the declaration may say that the units can only be used for “private single-families.” In this case, owners may not be permitted to use their condo for short-term rentals.
Moreover, a recent Ontario court ruling has confirmed that condo boards can prevent owners from using their unit for short-term rentals by passing a rule.
Your condo corporation’s documents may also set out a minimum permissible rental period. For example, your condo’s documents may prohibit rental or tenancy agreements for a period shorter than six months.
BE INFORMED
Short-term rentals can be a great source of supplementary income, but before you post or list your property on a short-term rental site, make sure that you understand the rules that govern you, both through your condo corporation and the municipality. Protect yourself by understanding how short-term rentals are addressed in your condominium corporation.
It is also important to send a letter or email about any issue to your condominium corporation. Your condo board or manager should be able to tell you how short-term rentals are handled in your condo corporation and let you know what they plan to do to address your issue.
Mail, deliver or fax letters to the magazine or to us, use the web site (schwarzlaw.ca), email (info@schwarzlaw.ca) and give us your questions, concerns, critiques and quandaries. We will try to deal with them in print or electronic form.