Toronto

Thousands of Toronto’s AirBnB Investors Plan To Sell This Year

Thousands of Toronto’s short-term rental investors may call it quits. An Ipsos Survey, commissioned by the Toronto Regional Real Estate Board (TRREB), shows how investors plan to navigate the city’s new short-term rental rules. Only a third feel their investment won’t be impacted by the new rules. The remainder either plan on selling, or finding long-term tenants for their units. This could mean a lot of new housing supply will hit the market over the next year.

Toronto’s Short-Term Rental Rules

The City’s new short-term rental rules are similar to what other major cities have been doing for years. Units will have to be registered, and will be limited to principal residences. Rental operators will also have to register, and collect a 4% accommodation tax. There’s a few other rules, but those are the most important details. The biggest change is the requirement for units to be primary residences. This should eliminate units bought specifically for AirBNB, and ghost hotels – a collection of units run by a single property manager.

Most Investors Plan On Selling Or Renting To Long-Term Tenants

The survey found only a third of short-term rental investors feel the rules impact them. Just under a third (32%) of investors felt they won’t be impacted by the plans this year. Not sure how a short-term rental investor isn’t impacted, but let’s gloss over it for today. The rest will be exiting the short-term rental game. The biggest group said they would sell the property over the next year, coming in at 40% of respondents. A much smaller, but still substantial, 26% of investors said they’ll look for long-term tenants. This can add a lot of supply to the market without any additional building. 

Toronto Short-term Rental Investor Plans

How short-term rental owners plan to respond to Toronto’s new short-term rental regulations.
Source: TRREB, Better Dwelling.

This Could Add Almost A Year’s Worth of Housing Supply

There’s no official numbers on short-term rentals, so it’s hard to peg exactly how much supply this means. Analysts like FairBnB estimate between 14,000 and 20,000 short-term rentals in Toronto. Using the survey to estimate, that could mean between 5,600 and 8,000 units would go to market. Another 3,640 to 5,200 units may go to rental. This can add almost a year of housing supply, in just a few months. It also does it without placing any more pressure on labor and land costs, which have soared due to short supply. 

One important note is this particular type of sale is a net benefit to supply. When investors sell, they aren’t likely to buy another place immediately, unlike homeowners. Toronto isn’t just expecting investors to sell short-term rentals either. The same survey found a significant number of general investors plan to sell over the next year. For the first time in a very long-time, Toronto’s real estate market may be well supplied.

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8 Comments

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  • Jamie 3 months ago

    Honestly, if you own an AirBNB, this is great. There was so much competition, rates were getting squeezed.

    • Liam 3 months ago

      Why would anyone sell if they can make the mortgage in a couple of nights?

      • Vlad 3 months ago

        If I ever lose my job, I’m going to airBNB places in Vancouver and Toronto and absolutely trash them. Like put manure in the unit, cut out the dry wall, plug the sinks and leave the water running when I leave.

        Oh and definitely take the batteries out of the remote and probably the google chrome too.

        I’ll call it “Vlad’s restoration stimulus package”. Hopefully we can take some of this “make your mortgage payment in 2 days” into “pay people that actually work for a living to repair your economy destroying feux-hotel”.

        This country is going to have no economy at all if it rewards speculation and rent seeking more than it does real hard work that produces things of value.

        • BigBong 3 months ago

          “This country is going to have no economy at all if it rewards speculation and rent seeking more than it does real hard work that produces things of value.” Totally, agree

        • Paul 2 months ago

          True. Innovation has dropped because we are putting all our energy into non productive efforts like the housing bubble. And we experience brain drain when our professionals are insulted at the cost to carry a home and to buy daily essentials. When Ny looks more affordable you know your city is in trouble.

    • CG 2 months ago

      The rental rates were ridiculously high. When traveling in Toronto a year ago, I chose a hotel because the costs were lower than an AirBnB condo. Breakfast and parking was included in the costs. AirBnB fees were over priced!

  • Responsible Host 3 months ago

    don’t hate, regulate. Great, because this legitimizes the business. Much less risk than if they tried an outright ban.

  • Afropuffo 3 months ago

    The issue will be enforcement, or lack thereof, like Vancouver.

    It is political lip service

Comments are closed.