Eight months after New York City outright banned short-term rentals like AirBnB, the City of Toronto has decided to regulate it. The new regulations are largely bureaucratic, such as licensing short-term rental companies like AirBnB, and starting a registry of short-term rental units. The biggest change however is going to be the banning of people listings units where they don’t live. Turns out some enterprising entrepreneurs may have been buying homes to operate as full-time rental suites.
Sure that sounds bad, but how many people are really doing that? Is the number large enough to even impact homeownership and rental rates? Let’s dive through some of AirBnB’s data points.
Extended Stay Rentals
The number of AirBnB rentals operating for extended periods of time is significant according to the company. Statistics submitted to the city show that 1,680 rentals (26%) were booked more than 91 days out of the year in 2015. The key word there is booked, of course it’s fair to assume these units were available on AirBnB for more than 91 days. 600 of those units were booked more than 181 days, representing 9% of listings. It’s also probably worth noting that 2,250 units, 37% of total listings, belonged to an operator of more than one listing. It would be interesting to see how many of these multi-unit operators overlap with the domestic speculator number the province released.
Source: City of Toronto, AirBnB.
Those numbers are pretty meaningless without context, so let’s give it some. AirBnB argues that this would be an almost negligent number if these were added back to the rental pool. When compared to the total number of dwellings in Toronto, that’s true for rentals. If those units were bought for the purpose of using AirBnB to generate income (yes, people do that), it would have represented the equivalent of 6% of sales in 2015. At 6% this would have provided the same amount of pressure to prices that Vancouver’s foreign buyers did. So if you think foreign buyers are a problem, you likely think AirBnB’s an issue too.
AirBnB Listings Are Concentrated In One Area
A study done by FairBnB argues that a large number of AirBnB units are all located in the same MLS district, C01. For those that don’t know, C01 is the downtown core of Toronto. 1,920 AirBnB listings were located in that region in 2015. By 2016 that number jumped to 4,817, a 150% increase. 3,696 of those units were full-home rentals, meaning 77% of these would not be occupied by the operator at the time of rental. Depending on how many of these were dedicated AirBnB rentals, significant pressure could have been placed on prices in the C01 region.
A Large Number of Homeowners Depend on AirBnB Income
An interesting point that AirBnB makes is that a large number of homeowners depend on AirBnB to make mortgage or rental payments. According to a study commissioned by the company, the typical annual income for a host in Toronto was $5,330. A whopping 40% of income hosts earn goes toward their rent or mortgage. It’s unclear if the mortgage or rent is the operator’s primary residence, or if they are paying speculative properties.
I’m totally undecided on the issue. As the company says, “40% of hosts rely on this income to make ends meet in an increasingly expensive city.” This helps people maintain their dignity, and prevent defaulting on a home that they couldn’t otherwise afford. On the other hand, since a number of homeowners couldn’t afford to buy in this market without AirBnB income, did they unnecessarily drive prices higher? Leave your comments below.
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It was good while it lasted, but revenues are being driven down by the number of units competing. Hopefully a little regulation will bring prices up a little more so hosts can actually make a little money.
We fought communism so we wouldn’t have to share our house, or car with strangers. Then capitalism made it so we had to share our house or car with strangers using AirBnB and Uber. I guess it wasn’t a terrible idea after all.
lol, thats right. This country is run by communists anyway
I rented a place, and rented out a condo I bought on AirBnB. Hate me if you must, but it built equity and was almost no trouble at all.
Nobody hates you or cares except the government right now.
AirBnB renters are more likely to trash amenities/cause noise issues vs long-term renters. I live in a low-rise condo in the core and the building it pretty tight knit aside from the random families/couples who stroll into the gym or BBQ area, trash the place and leave without a second thought.
I’m all for AirBnB but there should definitely be a bit of regulation that favors protecting condo owners interests.
This is so not true!!! I’ve had both long terms renters in my condos and short-term renters in my home. Reviews from Airbnb give me far more confidence in people. My condo renters trashed my place so bad I had to redo the wood floors and repaint the entire home after 1 year. My Airbnb renters have been a joy. But then I rent out a room in my home where I live AND I only accept guests who have good reviews.
I imagine you’d have to be a pretty big jerk to damage someone’s home while they’re in it. I also imagine people that are renting a room do better screening than people running an empty house like a hotel.
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