By Tess KalinowskiReal Estate Reporter Mon., Nov. 18, 2019

A provincial planning tribunal has rejected an appeal by Airbnb landlords and upheld the city’s short-term rental rules in a decision that is being touted as a “major victory for tenants across Ontario.”

In his ruling, an adjudicator for the Local Planning Appeal Tribunal (LPAT) rejected landlords’ arguments that short-term rentals were just like any residential use of a home.

He said the city’s Airbnb regulations “represent a reasonable balancing … ensuring that housing is provided for residents, that a full range of housing is available including short-term rentals, and that the business and tourism economies are supported.”

Toronto council approved the zoning bylaw amendments in December 2017. They were supposed to take effect in June 2018 but were never enforced because of the appeal at the LPAT.

Under Toronto’s rules, short-term rentals would be allowed only in landlords’ principal residences for up to 180 nights a year for an entire house or apartment. Homeowners could also rent up to three bedrooms year round on a short-term basis — a term defined as less than 28 days.

Homeowners also wouldn’t be allowed to use basement apartments as short-term rentals. Only the full-time resident of those suites could let those units for less than 28 days.

In a written decision Monday, the LPAT said the city’s approved rules have the potential to return up to 5,000 of Toronto’s more than 21,000 Airbnbs to the long-term residential market. Those are the units where the property owners are not residing but rather using the homes exclusively as short-term rentals.

“Even if you return only 3,000 it’s a huge win for renters in Toronto,” said Thorben Wieditz of Fairbnb, a pro-regulation coalition of tenant advocates, community groups, academics and hoteliers that participated in the appeal process.

Mayor John Tory also praised the decision saying it strikes the right balance between allowing people to earn extra money through homesharing and ensuring the city’s rental housing isn’t depleted by tourist accommodation.

“These changes do not prohibit short-term rentals but permits and regulates them in a manner that does not displace households. They also provide opportunities to meet the needs of residents and visitors requiring or preferring short-term rental accommodation in a residential setting,” he said in a statement.

It is not clear whether the landlords will appeal the decision or how long it will take the city to implement the new short-term rental regulations.

The landlords have 30 days to request a review of a decision from the associate chair of the LPAT or appeal to the Divisional Court.

An appeal would be “unreasonable and a detriment for the public interest and a selfish thing to do if it comes from an individual host and not a very civic thing to do if it comes from the company,” Wieditz said.

LPAT adjudicator Scott Tousaw said the city’s zoning bylaw “has a solid basis and planning rationale” based on “consulting widely with industry and public stakeholders.”

He noted that homesharing, where someone rents a room in their house, and rentals for periods of longer than 28 days would still be allowed.

The tribunal agreed with the city and Fairbnb that secondary suites are intended to increase the city’s housing supply. The provincial policy encouraging basement apartments, “could not have been intended to provide for visitor or tourist accommodations,” Tousaw wrote.

During the appeal hearing, Leino’s lawyer raised the question of whether the city’s Airbnb restrictions might prompt some homeowners to rip out their secondary units or discourage their installation. Toronto has 2,138 legal secondary units but it estimates there are another 70,000 to 100,000 that aren’t on the books as having the required fire and building code compliance.

The LPAT found the city’s record of Airbnb-related nuisance complaints was insufficient to prove that short-term rentals comes with noise, garbage and parking. Tousaw did, however, find “that the commercial characteristics of dedicated short-term rentals could have an effect on neighbourhood character.”

A city spokesperson said Toronto will move ahead with implementation but it will be December before there’s more information on when the rules take effect.

“While this ruling provides regulatory certainty for homesharing in Toronto, we continue to share our hosts’ concerns that these rules unfairly punish some responsible short-term rental hosts who are contributing to the local economy. We remain committed to working closely with the City of Toronto and the Airbnb community as these new rules are implemented. We encourage other platforms to also come to the table and support responsible homesharing in Toronto,” said a statement attributed to Alex Dagg, public policy manager for Airbnb Canada.

Airbnb is the biggest short-term rental platform operating in the city but it did not have formal standing at the appeal. But websites such as Expedia, VRBO and Kijiji compete with the company.

The city has a plan to enforce its rules through a licensing bylaw that would require landlords to register their rentals with the city and pay $50. Rental platforms would have to pay a one-time licence application fee of $5,000 plus $1 for each night booked through the company. Landlords would also be responsible for a 4 per cent Municipal Accommodation Tax on rentals that are less than 28 consecutive days.

A November 2017 report to the city’s Licensing and Standards Committee said bylaw enforcement was expected to cost $1.18 million for five-full-time staff and a one-time expense of $905,000 for three city workers to implement the bylaw. The ongoing cost of the program is supposed to be covered by the fees.

Tess Kalinowski

Tess Kalinowski is a Toronto-based reporter covering real estate. Follow her on Twitter: @tesskalinowski