Will Airbnb crackdown trigger sell-off? Cressy ok with ‘home-sharing’

“I just don’t understand why more people aren’t talking about this.”
A Torontonian woman who’s invested in multiple Downtown rental properties (and has asked to remain anonymous), thinks platforms such as Airbnb are an “illusion” to the real problem of Toronto’s housing crisis.
Last month, Toronto’s executive committee, chaired by Mayor John Tory, met to discuss one of the city’s current grey areas: short-term rentals.
Recently, the business of short-term renting has come under scrutiny, the more notable of examples being the American company, Airbnb. While successful, some say its usage is having a less than desirable impact on the city’s housing market, and needs to be properly regulated.
According to legal documents obtained from the city’s website, there is “anecdotal evidence” that short-term rentals are harming Toronto’s housing market by “reducing housing availability” and that landlords are choosing to evict tenants to “operate short-term rentals” instead.
While the committee voted to approve proposed regulations that address short-term renting issues, are rental systems such as Airbnb truly to blame for the city’s housing market woes?
Once a popular Airbnb host, our source says the city’s housing market predicament goes back to a provincial law enacted in the 1990s.
“To keep it simple, why doesn’t somebody say ‘Well how did we get into this Airbnb thing to being with?’ It’s a 1991 rule that says you can increase the rent to whatever you want.”
The “rule” in question, sometimes referred to as the “post-1991 exemption” is a rental law that was enacted to reignite the city’s rental housing market, as its state in the 1990s was rather similar to today’s: often unaffordable and unavailable.
The law states that the maximum rent increase allowance (set annually by a percentage) only applies to units built before November 1991. Therefore, if you live in one of the city’s newer buildings, your landlord may be able to increase the rent past the province’s maximum allowance.
The law was created to provide incentive for builders to develop more rental units, subsequently solving the housing shortage issue. However, the consensus over whether the objectives of the law have been carried out remains moot.
With the proposed short-term rental regulations, our source fears that investors such as herself may be forced to sell the property they’ve invested in and says rent will continue to increase for future tenants because of the so-called “1991 loophole”.
“You got the city saying you can’t do short-term [rentals if you’re not the principle residence of the unit], so what are you going to do? A lot of people are going to sell…they can no longer afford [it]. You’re going to have [other] people buy these places and use Airbnb. They’re going to say it’s under their principal residence and charge whatever they want. How is that solving [the] affordable housing [problem]?”
The committee addressed the claim that a major problem of current short-term renting is whether or not the “host” of the unit actually lives in the space they are renting out. One of the proposed regulations states that the host of a “home-sharing” unit can only rent out the space if it’s within their “principal residence”.
Councillor Joe Cressy of Ward 20 Trinity-Spadina spoke with us, and at the aforementioned meeting, on the subject.
“Home-sharing is where you rent a home in your principal residence. I’m in favour of home-sharing, and there’s different business models to permit that. The business model from Airbnb [hasn’t] proven to me that their business model is based on home-sharing. It seems to me that it’s based more on an investor-driven market which is exacerbating the rental-housing crisis.”
The amended regulations now face public consultation and a final report will be presented to council later this year. Our source hopes that, in the interim, further investigation is conducted by the city to ensure Toronto’s housing issues are in fact being tackled.
“I want someone to ask ‘Is it really Airbnb that’s the problem? Or is it this 1991 law that was made to put the developer first?’”