Archived: As of November 20, 2019, we no longer update on this post. Please visit our new post Toronto Short-Term Rentals instead.
What is short term rental?
You may find the definitions of short term rental in the Residential Tenancies Act, 2006 (Act) and Toronto Bylaw. However, they are not the same.
Pursuant to Toronto Bylaw, short term means 28 days or less. Short term rental includes short term lease, subletting (subtenancy), occupying (such as a roommate), and any forms of short term rentals including Airbnb.
The Residential Tenancies Act, 2006 (Act) does not define “short term” but indicates that the term of a lease could be daily, weekly, monthly, or non-fixed term. Therefore a short term lease that has a daily or weekly term may be considered short term rental. Additionally, the Act only recognizes residential landlord-tenant tenancy and sub-tenancy. In other words, only short term lease and subletting should be considered short term rentals. (landlord-roommate rental or tenant-roommate rental is not a tenancy under the Act)
Legality of short term rentals in Toronto
Currently, the Toronto Bylaw prohibits either the owner or tenant from doing short term rentals, but this situation might change. In late 2017 and early 2018, Toronto approved the Bylaw 613-2018 which allows short term rentals. However, this Bylaw is currently not in force pending review of the Local Planning Appeals Tribunal. In other words, short term rentals are still not permitted by the Bylaw.
On the other hand, the Act does not treat short term tenancies illegal. In other words, if the landlord does short term rental or the tenant wants to sublet the rental unit for the short term, it is legal to do so under the Act.
There are questions regarding the legality of whether the tenant can use the rental unit for short term rentals or Airbnb. We are going to explain them based on the scenarios below.
Scenario 1: I am a tenant, and I want to rent out a spare bedroom in my rental complex for short term or Airbnb
The Toronto Bylaw prohibits short term rents, and doing so would be considered illegal. On the other hand, the Act is silenced on whether a tenant is allowed to use the spare room for short term rentals. The Act provides that your landlord may evict you based on an illegal business or act. Now the question becomes whether doing short term rental will constitute an illegal business under the Act that results in eviction.
In my view, it will not likely to be considered illegal if you maintain the following conditions:
- You need to occupy the rental unit as your residence,
- You are responsible to ensure the occupant’s good behaviour, and
- You shall not charge your occupants more than what you pay to your landlord.
Again, it is not said that you have an absolute right to rent out a spare bedroom for the short term or Airbnb.
Scenario 2: I am a tenant and I want to sublet my entire rental unit to someone while I am away for a short term
You may sublet your entire rental unit for a fixed term, either long or short term, as long as you get your landlord’s consent. If without the landlord’s consent, the landlord may have a right to evict you.
Secondly, you shall not charge your subtenant more than what you pay to your landlord. Some tenants may pay a fairly low rent because they have got the place years ago. Since the rent in Toronto has been soaring, they might want to make some money out of it. However, if you receive the money from your subtenant that is more than the rent you pay to your landlord, it is considered an illegal business, and you may face an eviction consequently.
Scenario 3: I am a tenant. I want to list my entire rental unit for short term rentals and Airbnb
This scenario is similar to Scenario 2 but it is different because you have no intent to occupy the rental unit. This will be considered an illegal business, and the landlord will have a right to evict you.
Also, this is essentially subletting under the Act, and the Act requires you to obtain consent from your landlord for each subtenancy. Therefore, if you fail to do so, this is another reason that allows your landlord to evict you.
Scenario 4: I want to list my own place for short term rentals or Airbnb
You need to be aware that currently short term rentals are not permitted in Toronto. Doing so may bring you the penalties set out in the Bylaw.
New Bylaw regarding Toronto Short Term Rentals
Again, the new Bylaw (613-2018) is not in force yet. The key features in the new Bylaw are as follows:
- Short term rentals become permitted in Toronto.
- Short term rentals of the entire unit by the owner cannot be more than 180 nights per year. Similarly, Short term sublets of the entire unit by the tenant cannot be more than 180 nights per year. In other words, this 180-day rule does not apply to roommate situations
- The person or company that receives short term rental revenues must pay a 4% Municipal Accommodation Tax (MAT).
- Commercial short term rental companies are required to apply for a license and pay a fee. Individuals are not required to have a license.
Therefore, when the new Bylaw comes into force, the tenant in Scenario 1 will have a right to rent out the spare bedroom on Airbnb. However, the tenant still cannot charge the guests more than what the tenant pays to the landlord.