Since the rise in popularity and use of Airbnb and other similar sites, the opportunity to make some extra cash by listing property on these websites seems to be gaining appeal. In urban centres short-term rentals have become a sizeable industry. This has meant that municipalities, and condominium communities alike have all had to grapple with how to respond to this growing sector of the new home-sharing platform. In this blog we address some important things you should take into account as you consider listing your home for short-term rental.
1) Are There Any Municipal Rules Restricting Short Term Rentals In Your Area?
On December 7, 2017 Toronto’s City Council approved the regulation of short-term rentals in the City. Other jurisdictions might take a different approach, including prohibiting or zoning short-term rentals, or excluding certain types of properties from eligibility.
In Toronto short-term rentals are permitted in all housing types however, Toronto area residents are only allowed to list their principal residence. The policy rationale behind this rule is to ensure that City Council is taking steps to encourage a supply of units in the city for the regular rental market. The rental market in Toronto is currently in short supply with less than 1% vacancies in the City as of the end of 2017.
Toronto residents are also only allowed to list their entire home for a total of 180 nights per year. Those who decide to rent their property out short term must register with the City and pay $50.00. These rules come into effect on June 1, 2018.
It’s important to check your municipality to see what rules have been put in place that apply to short-term rentals.
2) Are There Any Condominium Rules Restricting Short Term Rentals In Your Condo?
Municipal rules are not the only rules that need to be considered. Even though Toronto has granted residents the conditional green light to participate in home-sharing, most condominiums will have contemplated the “use” rules of units within the condominium declaration, by-laws or rules. Some condominiums strictly prohibit short-term rentals in their declaration. For example there may be a provision in the declaration which states that any rentals must be for a minimum of a six-month period. Where a declaration might be less explicit about short-term rentals, there may be by-laws or rules that have been enacted that serve to discourage short-term rentals.
The Condominium Act also requires that owner’s notify the condominium if their unit is being leased and are required to provide the name of the tenant, a summary of the lease and the tenants are to be provided with a copy of the condominiums declaration, bylaws and rules. This clause does not seem to contemplate short-term rental scenarios.
Amendments can be made to a declaration to either allow or prohibit short-term rentals depending on what the majority of owners desire, 80 or 90% support from the owners is required in writing to make such a change. This level of consensus can be quite difficult to achieve, particularly in larger condominiums.
3) For Renter’s (Non-Homeowner Residents) – Are There Any Rules Restricting Short Term Rentals In Your Lease Agreement?
In Toronto you can list a property as a short-term rental whether you are the homeowner or a resident who is not the homeowner. If you are renting the unit from the homeowner and if you decide to list the entire property on a home-sharing site, this would be considered subletting the property. However, you must carefully consider whether there are any provisions of your lease agreement that may impact on your ability to do so. Under the Residential Tenancies Act rental units can only be sublet with the landlord’s permission. However, this doesn’t apply when you’re only renting out a room in the home.
If you’re a condo owner contemplating renting your condo out long term – as of April 2018 you are required to use the Ontario Standard Form Residential Tenancy Agreement as your lease agreement with any tenant. Paragraph 14 of the agreement stipulates that the tenant may not assign or sublet the unit without the consent of the landlord which cannot be reasonably withheld. However, the Standard Form Agreement does not contemplate short-term rental of a room of the home and is permissive when it comes to hosting guests. Condo owner landlords may consider including as additional terms to the lease, rules about short-term rentals, provided those rules don’t contravene the Residential Tenancies Act.
4) Are you properly insured for short term rental of your property?
Your home owner or renter’s insurance for your property as it stands may not offer coverage for short-term rental of the property. You will want to discuss this issue with your insurance broker to make sure you do have proper coverage in case something goes wrong during a short-term rental stay, such as damage to the property or injury to a guest. Failure to do so may result in a denial of coverage or the policy being voided for misrepresentation.
5) Does this mean you can’t list your condo or home on AirBnB?
Not necessarily, there are condominiums that have declarations which are short-term rental friendly. These condominiums specifically allow short-term rentals in their declaration, at least one in Toronto has also partnered with Airbnb to enhance their short-term rental offering and security in the building. In recent court rulings where the board of directors of a short-term rental friendly condominium has attempted to change the declaration by court order, or argue that the permissibility language contradicts other restrictions in the declaration they have not been successful. In these cases the board was unable to garner the necessary support in writing from over 80% of owners to amend the declaration and therefore sought to do so by court order. The court in these cases have been reluctant to interfer with the rights of a condo owner as set out in the declaration, including the right to rent it out short term if that’s what the declaration allows. The key is to check all of the various rules that may apply to your listing to ensure you comply before you consider listing your condo as a short-term rental.
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