As short-term rentals have become prolific worldwide, most governmental authorities have realized that the sharing economy is here to stay, and that regulating short-term rentals makes more sense than trying to ban them outright.
In late December, 2017 and early January, 2018, the City of Toronto (the “City”) adopted regulations regarding the licensing, registration, and regulation of short-term rental companies and operators (i.e. hosts).
Those regulations permit short-term rentals (rentals that are less than 28 consecutive days) only in the principal residence of owners and tenants. If less than the entire principal residence is being rented on a short-term basis, no more than three bedrooms may be rented on a short-term basis. Hosts are deemed to have only one principal residence at any one time.
The regulations also require hosts to register with the City and pay an annual registration fee of $50. Short-term rental companies must be licensed and pay a one-time licence fee of $5000 and a fee of $1 for each night booked through the company.
The City also implemented a 4% Municipal Accommodation Tax (”MAT”) which applies to short-term rental companies and hosts.
The City’s zoning by-law amendment which permits short-term rentals as a use has been appealed to the Ontario Municipal Board (“OMB”). For that reason, the short-term rental regulations and the MAT will not come into force pending the appeal. The appeal is scheduled to be heard on August 30 and 31, 2018. The City does not expect a decision from the OMB for at least 8 weeks after the hearing.
If the OMB supports the city’s zoning by-law amendment, the short-term rental regulations and the MAT will come into force some time after the OMB decision. Enough time will be given to enable short-term rental companies and hosts to submit applications for licences/registration. Details about the collection and remittance of the MAT will also be made available at that time.
