Toronto Kills AirBNB condos with 3 new rules

Last Modified: September 16, 2020

Toronto just implemented some new rules and regulations in the short-term, Airbnb condo market

The rental market in Toronto is currently seeing an abundance of supply, partly due to the lack of international students, as well as far fewer immigration than we’d normally be seeing due to Covid.

The other reason for the increased supply, and likely the larger culprit, is the fact that the tourism industry is dead, and with it, so is the Airbnb rental market. Many, if not most Airbnb investors who are sitting on vacant units right now, have listed those units for lease on the condo rental market. This surge in available supply for rentals, coupled with the current lack of demand, has caused rental rates to regress – anywhere from 5 to 20%, depending on neighborhood and condo building.

As usual the government has gone and picked an absolutely terrible time to implement new rules and regulations that might shake up the housing market, but nonetheless they exist to make investors lives harder, so lets get into the rules

  1. Firstly you have to register your airbnb unit with the city of toronto and pay a $50 per year renewal fee, no big deal right 
  2. Next you have to pay 4% tax to the city on a quarterly basis. We’re canadians so we’re used to being taxed out the wazoo, so no big deal on this either I guess
  3. But finally, and most importantly, you can only airbnb your primary residence – your home, either part of it or all of it

In effect, this would mean that you can no longer list investment units on the Airbnb rental market.

If I was a conspiracy guy I’d bet BigHotel™ wrote these regulations up, because this pretty much kills the airbnb market

Of course the question a lot of Airbnb investors will ask is, will this be enforced and how effective will the enforcement be?

For the time being, we don’t know, but we can safely make a couple of assumptions

First being, this isn’t going to fix rental affordability in Toronto. 

The truth is, people have been complaining about the lack of affordability in Toronto since the leafs last won the cup – and honestly, buckle up because it’s only going to get worse in the future

The truth is, we build far less condos than we need in order to satiate demand. This is due largely to challenges developers face in development – zoning, high land costs, rising construction costs, and astronomical development charges – as well as the massive amount of immigration we see in Toronto.

Some people – the type of people who get their real estate advice from BlogTO and Narcity – love to rant and rave about how foreign investors and airbnbs are the biggest culprits of housing cost inflation in Toronto

This is of course not Toronto’s primary housing cost driver – it’s a secondary, or tertiery concern at best. The crux of the issue is supply and demand.

For context, as of may there were 23,524 airbnb listings in Toronto. Many of these are spare rooms, guest houses, that sort of thing.

15,175 of those were entire home or apartments, which is the number we care about


Lets make the assumption that maybe a third of those investors decide to sell their investment units over the next year or two in favor of the lower rental yield with regular leases

That would mean about 10,000 units would come on the rental market

Sounds like a lot, right?

Well its important to note that as of 2016 Toronto had over 840,000 condo apartment units – and that number is certainly well above 900K today, with the completions we’ve seen between 2016 to 2020

Effectively, this translates to meaning that a 10K influx in units actually only represents about 1.2% of the market. In other words, Airbnb rentals only takes up about 1.2% of our ‘housing stock’.


If you think 1.2% is enough to make a dent in the market, remember that absolutely nothing happened to prices in Toronto when we implemented the foreign buyer tax, despite foreign buyers making up a whopping 3.3% of purchases in Ontario – twice the size of the ‘Airbnb market’

Now with all of that said, having all those units listed on the rental market at roughly the same time? Whilst simultaneously having half our usual immigration and no international students – That’s definitely enough to feel a short term effect, and we’re seeing it in the rental market right now

So, if you’re looking to rent something, get in now while there’s deals to be had, because this is unlikely to last long

Remember the last time the government meddled in the real estate market with the so-called ‘fair-housing-plan’, ostensibly created to improve rental affordability? How’d that go?



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