Short-term rentals have become increasingly popular in recent years. Platforms like Airbnb and VRBO make it easier for homeowners to rent out their properties to travellers for short periods. However, the rise of short-term rentals has also raised concerns about their impact on the housing market. This is particularly true in cities with limited housing availability. In response to these concerns, Toronto has recently introduced new laws governing short-term rentals. Keep reading as we explore these new laws and their impact on new investors.
The new laws on short-term rentals in Toronto were passed in December 2021 and went into effect on January 1, 2022.
Under these laws, hosts can only rent out their primary residence, defined as the place where they live and are registered to vote, for short-term stays. Secondary suites, such as basement apartments, can also be rented out if they are registered with the city as separate dwelling units. Hosts must obtain a license from the city to operate a short-term rental, and must renew their license annually.
In addition to these regulations, there are also restrictions on the number of days per year that hosts can rent their properties. Hosts can rent out their primary residence for up to 180 nights per year. They can rent out secondary suites for up to 90 nights per year. Hosts must also collect and remit a four percent Municipal Accommodation Tax (MAT) on all short-term rentals.
These new laws are designed to address concerns about the impact of short-term rentals on the housing market in Toronto. By limiting short-term rentals to primary residences and registered secondary suites, the city hopes to preserve its housing stock for long-term residents. The limits on the number of nights per year that properties can be rented out are intended to prevent short-term rentals from displacing long-term renters.
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So, how do these new laws impact investors?
For those looking to invest in a property as a short-term rental, the new regulations may present some challenges. Investors need to ensure that the property is their primary residence or a registered secondary suite to comply with the new laws. They must also factor in the limit on the number of nights per year that the property can be rented. This could impact the property’s profitability.
However, for investors who are willing to adapt to the new regulations, there may still be opportunities in the short-term rental market. Toronto remains a popular destination for travellers, and the demand for short-term rentals is likely to continue. Investors who comply with the new laws and provide high-quality accommodations could carve out a profitable niche in the market.
Overall, the new laws on short-term rentals in Toronto are an important step towards balancing the needs of residents and travellers in the city. They may present challenges for new investors in the short-term rental market. However, they also provide an opportunity for those who are willing to adapt to the changing regulatory environment.
As with any investment, it’s important to carefully consider the risks and rewards before making a decision.
Are you looking to invest in the short-term rental market in Toronto? Our team can help you navigate the new regulations and find the right property for your investment goals. Contact us today to learn more!
