It is now compulsory to register short term rental units

BY JAY BRIJPAUL

Toronto has taken the first leap on mandatory registration of short-term rental units. This new ruling applies to operators who are renting their homes on a short-term basis, not exceeding twenty-eight days in a row. The City of Toronto will launch an on-line registration system starting on September 10^th, 2020, where all short-term operators must comply. My guess is that the other municipalities will soon follow.

With mandatory registration, the city can monitor short-term rentals. Owners who are currently renting their home on a short-term basis, or planning to do so, must register on or before December 31^st, 2020. As of January 1^st, 2021, new operators must register before they can rent. An application for an operator’s registration would require: (1) the operator’s name, phone number, and e-mail address; (2) the address of the operator’s short-term rental; (3) description of what parts of the property will be used for short-term rental; (4) description of the type of building in which the short-term rental is located; (5) the name and telephone number of an emergency contact person who will be available 24 hours a day during rental periods and (6) government-issued identification that is satisfactory  to determine that the short-term rental is the operator’s principal residence.

Once registered, the operator will be given a registration number. This number must be included in every promotional or advertising material and any other documents such as invoices and receipts used to run their business. Short term rental companies such as Airbnb, would require a license as well. Operating a short-term rental without registration as of January 2021 without a license will be illegal.

Short-term rentals are governed by the city’s zoning bylaws and the Licensing and Registration of Short-Term Rental Bylaws. The bylaws allow short-term rentals in all housing types. However, homeowners can only use their principal residence as a short-term rental. The principal residence is where the homeowner actually lives. The address of the principal residence should be the mailing address for the operator.

Owners and tenants can operate a short-term rental; however, they must register the unit. Since it is the principal residence, they can rent up to three bedrooms for an unlimited number of nights per year. The entire house cannot be rented for more than 180 days per calendar year. Landlords with long term rentals should be careful in screening their tenants. When a tenant sub-rents a portion of the rental property for short term rental, the property will undergo more wear and tear. Also, the potential for liability increases. In the event of any problems, the landlord’s insurance may not cover the claim. It is imperative for landlords to incorporate into their lease contracts that the tenant will not use the premise to operate any businesses, including short term rental. Landlords must ensure that their tenants have tenant’s insurance. Basement apartments and laneway suits are ideal for short-term rentals provided that they are a part of the principal residence.

All short-term rental operators must collect and remit 4% of the gross rental income as Municipal Accommodation Tax (MAT) every quarter as of January 2021. A record of every concluded transaction must be kept for three years. The records must have the following : (1) name, address, and registration number of the operator; (2) number of nights the short-term rental was rented; (3) nightly and total price charged for the short term rental; (4) whether the rental was an entire-unit rental or partial-unit rental; and (5) any other information required by the Executive Director of the licensing department. An operation that is not following the rules and found guilty of an offence is liable to a fine not exceeding $100,000. In addition, any person found guilty can be subject to a daily fine not exceeding $10,000 until the problem is corrected.

Recently, short-term rentals have become popular, allowing visitors many more options when compared to other accommodations. It is an income booster for many. An average basement apartment can fetch about $1,400 monthly for long term rental. However, with short term rental, the operator can fetch about $6,000 monthly. That’s an annual income of about $72,000. Anyone who plans to operate short-term rentals should first check with their municipality. It is best to ensure that the rental space is safe, clean and offers proper amenities.

Mandatory registration is the catalyst needed to regulate the short-term rental business. With strict guidelines and stiff penalties, owners will have to be more careful. With the new rulings, owners cannot buy a second property hoping to use it for short-term rentals.