The city says its short-term rental rules are about protecting Toronto’s housing supply and maintaining the stability of its beloved residential neighbourhoods — even the ones located in highrises.

Landlords say the rules restrict their property rights and income.

The two sides waited a year to put their cases before the province’s Local Planning Appeal Tribunal (LPAT). Its adjudicator Scott Tousaw will decide whether the bylaw — originally supposed to take effect in June 2018 — ever goes into play.

It’s not clear when he will deliver a decision but it will be after an Oct. 15 hearing date in which summary arguments will be presented by lawyers representing the city, the landlords, and the Fairbnb coalition — a group comprised of tenant advocates, hotel industry representatives, neighbourhood groups, residents and academics.

Here are some of the take-aways from the first eight days of hearings that took place in August and early September after a year’s delay.

Tenants are primary when it comes to secondary suites

Much of the tribunal was occupied with the bylaw’s restrictions on property owners’ ability to use legal secondary suites as short-term rentals.

It turns out Toronto has 2,138 legal secondary units. Built between 2002 and 2018, those are the suites for which the city has building permits on file.

When the Star questioned that number directly with the city, it found the legal units are dwarfed by the Toronto’s estimate of another 70,000 to 100,000 secondary suites built prior to amalgamation. Some of those complied with the building and fire codes of the time and are considered legal but the city has “no consolidated records” of those. Others, built without permits, are considered illegal. Toronto has no record at all of those.

The city offered no clear explanation of how it intends to stop homeowners from renting illegal secondary suites, only that it doesn’t want to be too explicit about enforcement because that would help people skirt the rules.

Those wanting to rent a secondary suite would be required to declare that it complies with zoning, building and fire codes when they register their unit with the pending licensing provisions. In an email to the Star, the city said it will verify that information if a consumer or enforcement agency complains.

The pending bylaw says the principal occupant of the legal secondary suite is the only one who can rent it on the short-term market. That means the long-term tenant would have to register the property with the city before advertising it on a platform such as Airbnb.

How much more does a landlord make from a short-term rental than a long-term tenant?

Homeowner Desiree Narciso told the tribunal she can make 450 per cent more renting her basement on the short-term market than she could to a single, long-term tenant.

She did not disclose her short-term rental income to the tribunal. But she said she rents the basement, which can be divided into a bachelor and a one-bedroom apartment, for between $90 and $160 a night per unit. She has an 80 to 90 per cent occupancy rate. Sometimes she rents the suites separately by closing a dividing door. Other times she lets the basement as one large unit.

Eighty per cent occupancy is about 24 nights a month. If she let the units out separately for that many nights at a maximum rent of $160 for the one-bedroom and $140 for the bachelor, Narciso would earn more than $7,000 a month from short-term rentals in her basement.

She told the tribunal that she wouldn’t feel great about charging even $1,600 a month in rent to a long-term tenant for that space.

But, like everything in real estate, location is key. Narciso’s Queen St. W., neighbourhood is popular with tourists.

A little further off the beaten track, Alexis Leino rents the basement suite in his East York bungalow for about $80 a night. The Star found several apartment ads on Kijiji listed for about $1,300 a month in that area.

Given the cleaning, towels, sheets, repairs and restocking of tea, coffee and pantry — on top of administering reservations and helping his guests, the Airbnb superhost said the income would likely be a wash if he rented to a long-term tenant. But Leino doesn’t want to do that. He wants occasional access to the basement to accommodate out-of-town friends and family.

Would Toronto’s approved bylaws kill short-term rentals? Does it matter, anyway?

Nobody denies there is a market for Airbnb and its competitors.

But the city’s bylaw would eliminate professional or commercial operators — the landlords who make a business out of renting multiple homes and rooms on the short-term market. They are the operators behind the so-called ghost hotels in condo buildings and ghost hostels in houses where rooms are rented individually with communal kitchen and living access.

Because the bylaw would restrict short-term rentals to the landlord’s principal residence, commercial hosts, who comprise about a third of Airbnb listings, wouldn’t be able to operate.

McGill University researcher David Wachsmuth, who has studied Airbnb, said those hosts have driven many occasional hosts out of the market. He agreed with city staff, who testified that fewer professional landlords would open the market to more true homesharing. Under the bylaw, residents can still rent their homes for terms of less than 28 days for up to 180 days a year. Individual rooms could also be rented for 27 nights at a time all year.

Land economist Peter Thoma, who testified at the tribunal on the landlords’ side, was skeptical that there are that many more residents interested in homesharing. He suggested the city should be worrying about its long-term hotel stock.

“Stripping out a professional approach (from short-term rentals) doesn’t do anybody any good,” he said.

Thoma testified that the city has failed to adequately study the economic impacts of its approved bylaw and that if Airbnb had been eliminated in 2016 it would have cost Toronto $40 million in lost spending and eliminated 600 jobs.

McGill’s Wachsmuth told the tribunal he has never seen any evidence that a short-term rental injects more dollars into a neighbourhood than local residents. He used the example of a coffee shop that might serve a tourist but could also be the regular stop of someone who lives nearby.

Do short-term rentals make bad neighbours?

Loading... Loading... Loading... Loading... Loading... Loading...

Research shows noise, garbage and parking woes follow short-term rentals, McGill’s Wachsmuth told the tribunal.

“These are costs that are being imposed on the neighbourhood and the costs are not being born by the operators of the short-term rentals,” he said referring to a study of external Airbnb-type rental impacts in several jurisdictions, including a Denver, Colo., case study.

For traditional hotels those are the costs of doing business but short-term operators make more money because they don’t have to pay to mitigate those issues, he said.

Toronto staff testified that the city has seen a rise in nuisance complaints related to short-term rentals.

“Minimizing the nuisances is one objective (of the city bylaw). But it is not the main objective,” senior city planner Caroline Samuel said. Earlier she testified that the city’s primary interest in regulating short-term rentals was to protect the stability and diversity of Toronto’s housing supply.

“Since 2016, the number of short-term rental complaints lodged with the city has doubled and tripled with zoning conformity being the number one complaint, followed by noise, property standards and waste,” Samuel testified.

She provided a laundry list of addresses with reports including strangers mistakenly walking into the wrong house; people climbing on the roof of a neighbouring home; a short-term rental with 18 beds advertised next door to a daycare with a shared driveway and a call about a mattress left to rot in a backyard.

The city received 514 short-term rental complaints between Jan. 1, 2014 and June 6, 2019.

Those complaints were based on calls to the city’s 3-1-1 system, which licensing and standards staff had to audit manually for the use of key words such as short-term rental or Airbnb, Samuel said.

A Toronto Police Service report to the city shows it responded to 127 incidents of crime in 2017 and 132 in 2018 related to short-term rentals. Theft accounted for more than 40 per cent of those complaints; property damage for 27.4 per cent in 2017 and 21 per cent in 2018. There were four incidents of homicides or shootings in 2018, according to the report.

The city didn’t know how many of those had resulted in convictions.

Landlords’ lawyers argued the zoning “complaints” might better be classified as inquiries and Thoma called the city’s complaint numbers “paltry.” He said 99.98 per cent of all Airbnb bookings are incident-free.

Any street can have the neighbour from Hell who fails to cut the grass and throws loud parties, said Michael Manett, a private planner, who testified on the landlords’ side.

Who knew what?

Clarence Westhaver, who rents out 10 Airbnb units in five properties, was among the landlords at the tribunal who told city lawyer Sarah O’Connor they had never explicitly asked Toronto staff if they were allowed to operate short-term rentals even though they had applied for building permits to renovate, repair and improve their properties — expenses in the tens or hundreds of thousands of dollars.

“I didn’t ask the city, ‘Am I allowed to be a short-term rental host,’ because I wasn’t looking to be a short-term rental host. I’m looking to be a landlord,” Westhaver testified.

Desiree Narciso has also spent major money repairing and renovating her home where she occupies the second and third floors. A long-term tenant lives on the ground floor and the basement is rented on Airbnb.

Although she called herself a poster child for building compliance, Narciso said she had never asked city staff if she could use the property as short-term rental space. She deferred to the architects, designers and engineers she hired.

But she said she had no reason to question the legality of her intent.

“The status quo showed that it was permitted. Everybody was doing it, it’s been done for decades. I think it’s fair to assume, given the long history of short-term rentals in this city, without further and clear direction from the city, I would think the status quo would hold some weight,” she said.