Area of Law: Real Estate Law
Answer # 0459
Short-Term Rentals and AirbnbsRegion: Ontario Answer # 0459
What is a Short-Term Rental (STR)?
Short-term rentals (STRs) refer to accommodations that are for rent for a short period of time for a fee, typically for days or a few weeks, usually while the homeowner is away. The practice is also sometimes referred to as ‘home-sharing’.
What is an Airbnb?
Airbnb is an online vacation rental service. Rentals that are listed on this site are called Airbnbs. Guests can book for both short-term and long-term rentals.
While the exact number of days varies by jurisdiction, generally short-term rentals are less than 28 days, and any reservation of a month or longer may be considered a long-term reservation. Airbnb takes a percentage of every booking.
Are there are rules or regulations that STRs must follow?
Operators of STRs are subject to rules and regulations that cover such issues as licensing, zoning, safety, and noise. These regulations are generally municipal such as municipal government acts and planning legislation, as opposed to provincial or federal. Violations of the laws may result in fines for both the guests and the hosts. Airbnb rentals may be subject to other rules. Refer to your municipal government local bylaws for more information.
Municipal bylaws regulate:
- what accommodations can be used as a STR and
- how long they can be used as STR in any given year
For example, in Toronto and Ottawa, a short-term rental can only be in a person’s principal residence (the home people stay in and the address they use for bills, taxes, etc). The rental may be for the entire home or for just a room.
In Toronto, STR by-laws apply to stays that are less than 28 days, and homeowners are not allowed to use basement apartments as short-term rentals. This may only be done by a full-time resident of the basement apartment.
In Ottawa, a STR is one where the stay is for less than 30 nights.
Other regulations may require that a STR owner:
- Register with municipal officials, obtain a permit or license, and pay a fee
- Pay municipal taxes such as Municipal Accommodation Tax (MAT) generally 4%
- Ensure that their STR meets health and safety, building, and fire codes
- Report the gross rental income and related expenses (e.g. advertising, utilities, maintenance and housekeeping) on tax return
- Register for a GST/HST account, charge GST/HST to the short-term tenants; remit the GST/HST to the government.
- If the STR is a condominium, ensure that STRs are allowed, or if there is a limit to the number of rentals that can exist in the building at any given time
Are STRs covered under the Residential Tenancies Act (RTA)?
The Residential Tenancy Act does not apply to all renters. The Act defines who is exempt from coverage, such as hotels, motels, vacation homes, or any accommodations meant for travellers. This is specifically stated in exemption 5(a) which lists
“living accommodation intended to be provided to the travelling or vacationing public or occupied for a seasonal or temporary period in a hotel, motel or motor hotel, resort, lodge, tourist camp, cottage or cabin establishment, inn, campground, trailer park, tourist home, bed and breakfast vacation establishment or vacation home”.
However, there are other rules and exceptions which may apply depending on your situation. If you have an issue as a tenant or a host of a STR and are not sure if the rules and regulations protecting both renters and landlords in the RTA apply to your situation, you should seek legal advice.
What should you do if you have a complaint about a STR?
If you have complaint about a short-term rental that has to do with noise or garbage or if you believe that people are renting out homes that are not their principal residence, you should call your municipal governments information line (such as 311 in Toronto). You may also be able to submit a complaint online on the municipality’s website.
What if a STR guest refuses to leave?
If you are the host of a STR and experience problems with a renter, such as a guest refusing to leave after their paid length of stay is over, you may be able to serve the guest with certain Landlord & Tenant Board (LTB) forms, such as an N4 – non-payment of rent. However, it is up to the LTB whether the Residential Tenancies Act applies or not.
It is best to consult with a lawyer or paralegal who is knowledgeable with the Residential Tenancies Act before contacting the LTB to discuss your options.
Short-term Rentals vs. Long-term Rentals
Long-term rentals (LTR) are generally anything longer than one month. This can include apartments, condos and homes for rent. Features of a long-term rental that differ from STRs include:
- tenants are generally subject to the rights, obligations, and protections of the Residential Tenancies Act
- revenue from a LTR is exempt from HST, however, it is still subject to income tax
- insurance is more likely available for a LTR vs a STR
If you have an issue as a tenant or a host of a STR and are not sure if the rules and regulations protecting both renters and landlords apply to your situation, you should see legal advice.
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