Posted on November 22, 2019
As of November 18, 2019, the City of Toronto legalized short-term rentals within its municipality. Under the definition of Chapter 547, Licensing and Registration of Short-Term Rentals (Chapter 547), short-term rentals means paid residential rentals of part or entire complex for consecutively 28 days or less.
WHAT DO YOU NEED TO KNOW ABOUT THE NEW RULES
As of November 18, 2019, any individuals or companies including corporations, partnerships, or sole proprietorships who provide short-term rentals for a fee must register with the City of Toronto. If you are a company, you are also required to obtain a license. Further, this requirement applies as long as you provide short-term rentals.
Who is required to register?
The registration requirement applies to the following short-term rental providers:
- Tenants, and
- Short-term rental companies including corporations, partnerships, and sole proprietorships.
Chapter 547 is silent for whether subtenants or roommates can provide short-term rentals. In my opinion, subtenants and roommates are not eligible short-term rental providers because their right to occupy the rental unit is limited to residential purposes only.
What are your responsibilities?
In addition to the registration requirement, some of your major responsibilities include:
- Pay a 4% Municipal Accommodation Tax (MAT) on all of the short-term rental income.
- Ensure that you only operate short-term rentals for a maximum of 180 days per calendar year.
- Must not advertise your short-term rentals without having registered them.
- Include the registration number on your short-term rental documents.
The penalties for non-compliance of Chapter 547
Section 5.3 of Chapter 547 provides the penalties for non-compliance. Depending on the circumstances, the City of Toronto may impose a fine up to $100,000 (subsections 5.3.A and 5.3.B), special fine (subsection 5.3.C), and $10,000 fine per day while the offence continues (subsection 5.3.D).
Please note that this is not a criminal offence because the municipality does not have the power to enact criminal law. Therefore, the offences will not result in criminal records.
SPECIAL ATTENTIONS FOR TENANTS WHO PROVIDE SHORT-TERM RENTALS
Chapter 547 allows a tenant to operate part of or entire rental unit for short-term rentals. In other words, if a tenant wants to sublet the entire rental unit (under 28 days) or list a spare bedroom on Airbnb, it is legal to do so.
However, tenants should be aware of the following legal issues:
- You shall ensure that you have obtained your landlord’s consent before subletting the rental unit.
- You are responsible for your short-term occupants’ behaviour within the rental unit or on the premises. For example, if your short-term occupant damages the rental unit, you are responsible to fix the damage under the RTA. Similarly, if your short-term occupant conducts illegal activity or business in the rental unit or on the premises, you may be subject to your landlord’s eviction under the RTA.
- Your monthly short-term rental income shall be less than the rent you pay your landlord. Otherwise, it might be considered an illegal business, and you may be subject to eviction under the RTA.
- It is still considered an illegal business under the RTA if you do not reside in the rental unit and use the rental unit solely for short-term rentals.
If you have any questions about this post, please feel free to contact us for a consultation.