Toronto council has crafted short-term home rental rules that will ban homeowners from offering self-contained “secondary suites” on Airbnb.

Some councillors pushed Thursday to include basement apartments and other secondary suites in the lucrative nightly rental market, as originally recommended by city staff and applauded by Airbnb. But they failed in this endeavour in a 27-17 vote.

Airbnb, the San Francisco-based online rental platform, has 10,000-plus Toronto hosts, about 700 of whom rent out secondary suites that will become illegal when regulations take effect July 1. The city knows of 16 other smaller short-term rental agencies.

Toronto hopes limiting such rentals to people’s “primary residence” will stamp out so-called ghost hotels, where visitors come and go but there are few actual residents.

Councillor Ana Bailao, council’s housing advocate, who, with Mayor John Tory’s support, led the charge to exclude secondary suites, told reporters Toronto “has acknowledged that short-term rentals have a place in this city, but we balanced that out with the housing situation that we currently have.

“I think we stayed true to our principle that any owner or renter in this city can use primary residences in short-term rental . . . . The city today struck the right balance in maintaining and protecting our (housing) stock, while allowing for innovation in this home-sharing economy.”

Bailao said there are only about 1,700 city-registered secondary suites, but the actual number could top 70,000 units. Under the new rules, only long-term tenants of secondary suites, not owners, could offer up space in one for nightly rental.

Alex Dagg, Airbnb’s policy director for Canada, said after the vote: “This is truly a big step forward for the city of Toronto in terms . . . (of) supporting the fact that we have thousands of families in Toronto who have been home-sharing and are now going to be formally recognized and regulated. We look forward to working with the city on the next steps.”

As for hosts renting secondary suites, Dagg would say only: “We’re going to take a look and evaluate how this affects our host community.”

Short-term rental hosts will pay the city a $50-a-year fee and face a rental maximum of three rooms for an unlimited number of days, or a whole home for no more than 180 nights per year. Short-term booking agencies will each pay the city a $5,000 licence fee and $1 a night per booking, and have policies to deal with noisy, disruptive tenants.

Sean Gadon, director of the city’s affordable housing office, warned council that allowing continued short-term rentals of contained suites with kitchens and bathrooms could see some long-term tenants evicted and possibly even forced into the city’s system of homeless shelters.

Councillor Gary Crawford, Tory’s budget chief, led an effort to revert to the staff recommendations to allow secondary suites.

“Homeowners deserve some flexibility with their investment,” said the Scarborough councillor, who added that some of his residents rely on income from renting out basement suites as Airbnbs and enjoy meeting visitors from around the world.

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Tory said council had a responsibility to put “reasonable” limits on property use. After a year of working to meet a target for affordable housing approvals, the mayor said he couldn’t watch “housing leak out the bottom of the bucket.”

The city will review the new rules in 2019.