Condos were a logical choice for Toronto property investors looking to get into the short-term rentals market. At its peak, Toronto had over 15,000 short-term rental units available. However, once Toronto’s short-term rental rules came into effect in January 2021 that dropped to about 4,500. That’s because more than half the units no longer complied with Toronto’s bylaws. As a result, many landlords switched to long-term rentals or chose to sell.
If you’re looking for investment opportunities in Residential Real Estate in Toronto, you might be wondering if the short-term rental option is worth it. Here we explain what the deal is with Toronto short-term rentals in 2022 to help you decide.
What is a Short-term Rental?
In Ontario, a short-term rental is “all or part of a dwelling unit rented out for less than 28 consecutive days in exchange for payment.” A short-term rental company facilitates the rentals and receives payment, while a short-term rental operator owns and rents their rooms or home on a short-term basis. The amount charged varies drastically depending on the location, size, views, amenities, etc.
What are the New Rules for Toronto Short-Term Rentals?
Here’s the basic details on short-term rentals:
- The city of Toronto allows short-term rentals for primary residence only.
- Properties can’t be listed for short-term accommodation without a valid registration number.
- Short-term rental owners must register their units and pay a $50 fee to do so.
- Once you submit your info to register, the city verifies your application and provides your registration number within five working days.
- To use your principal residence as a primary or secondary suite, you have to meet fire code requirements.
- You can’t use secondary properties as short-term rentals which would be investment properties or vacation homes.
- Rentals must be for no longer than 28 days.
- Toronto charges a 4% Municipal Accommodation Tax (MAT).
- Short-term rental listings must include:
- Your Registration number
- Your Guest’s information
- An Emergency number
- An Emergency exit plan
- You can lease up to three bedrooms in your primary unit.
- Units can only be rented for a maximum of 180 days each year
So, as you can see you can only rent out your own home, or rooms in your own home to become a short-term landlord. This is not ideal for most people.
When is Becoming a Short-Term Operator a Good Idea?
There are a few circumstances when you might consider becoming a short-term operator including:
- You travel a lot and your home sits empty for weeks at a time
- You have a more private area in your home or on your property that wouldn’t be quite as intrusive to rent to tourists
- You actually love the idea of hosting people in your home
If you’re okay with any of the above, you could use your home to earn extra income to help pay down your mortgage.
What are the Major Issues with Becoming a Short-Term Operator?
You never know what you’re going to get. You could have perfectly lovely renters who leave your home or rooms in pristine condition, or you could come home to find your home is destroyed. You also cause issues with your neighbours if you have rowdy, unruly tenants, or even have neighbours complain to the city to discourage you from renting. Last but not least, to cover liabilities and damages you also want shared home or short-term rental insurance just to be safe which adds to your monthly costs.
The Bottom Line
While short-term rentals can provide income to help cover your mortgage, they also leave you open to stress, property damage and neighbour disapproval.
If you’re looking for a team of Toronto realtors to help build your wealth, the Christine Cowern Team’s got you covered. Give us a call at 416.291.7372 or email us at firstname.lastname@example.org. We’d love to work with you!