As Toronto tries to clamp down on short-term rentals to maximize housing supply in the midst of a housing crisis, a cottage industry of short-term rental hosting companies continue to help investment property owners evade the city’s rules, a Star investigation has found.
Property records show 88 of the 234 units at Toronto's ICE Condos registered for short-term rentals are owned by someone whose mailing address differs from the unit itself.
Thorben Wieditz, executive director of advocacy group Fairbnb Canada Network, said he would like the City of Toronto to implement a more rigorous verification process for short-term rental registrations.
As Toronto tries to clamp down on short-term rentals to maximize housing supply in the midst of a housing crisis, a cottage industry of short-term rental hosting companies continue to help investment property owners evade the city’s rules, a Star investigation has found.
The sales rep on the phone is reassuring. He works for a property management company that specializes in short-term rentals, and he says Toronto’s bylaw is easy enough to get around.
Yes, you need to register if you want to list your place on Airbnb now, and you need to say that you live in the condo, he says.
But if you don’t, all you have to do is change the address on your driver’s licence.
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You have a second unit you also want to list on Airbnb? Ask your spouse or another family member to change their driver’s licence as well.
“We know the process,” he says. “I can guide you how to get this done.”
As Toronto tries to clamp down on short-term rentals to maximize housing supply in the midst of a housing crisis, a cottage industry of short-term rental hosting companies continue to help investment property owners evade the city’s rules, a Star investigation has found.
The Star called six property management companies in Toronto and posed as prospective customers.
The call above was with The Bay Suites — “your trusted partner in the lucrative world of short-term rentals,” according to their website — but all of the companies provided similar instructions for how to falsify a principal residence, a key requirement of the city’s short-term rental bylaw, which took effect in 2021.
Critics say the casual disregard for the city’s rules illustrates how the financial incentives of short-term rentals continue to outpace enforcement efforts. Short-term rentals, which studies show reduce the long-term housing supply and correlate with increased rental costs, are typically more lucrative for landlords, who can earn twice as much — or more — renting out on a short-term basis, especially during high seasons. It also frees them from the legal obligations they would have to long-term tenants.
The city says it is doing the best it can to enforce the bylaw with the resources it has, but it is currently in the midst of a review to “identify areas for improvement,” including around enforcement.
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Simply having a bylaw will deter many people from breaking the rules, said David Wachsmuth, professor at McGill University and Canada Research Chair in urban governance. But with so much money on the line, self-enforcement isn’t going to catch everyone.
“The foundation of the whole system is people making a declaration about their principal residence,” Wachsmuth said. “I don't think anybody would be surprised with the idea that this is going to be the weak link.”
City relies on driver's licences when vetting
When Toronto set out to restrict short-term rentals it had a clear target: investment properties that were being rented out year-round, like a hotel.
So when the city crafted its bylaw the most important element was the requirement that to rent out your property on a short-term basis — fewer than 28 consecutive days — you had to actually live there. What this means, according to the bylaw, is that the registrant must reside in the home for at least half the year. It should also be the address they use for bills, taxes and insurance.
If you’re renting your place for 28 days or longer, the bylaw does not apply and you do not need to register.
Restricting short-term rentals to principal residences is identified in several studies as the best way to reduce the number of commercial short-term rentals in a city.
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A recent report by economists at Desjardins called on other Canadian cities to restrict non-principal-residence short-term rentals “to help alleviate Canada’s housing crisis.”
To register for a short-term rental licence in Toronto you have to pay a $53 fee and provide one piece of government-issued photo identification that includes your address — typically a driver’s licence.
That’s the “main piece” the city uses to verify someone’s principal residence, said Carleton Grant, who leads Toronto’s Municipal Licensing and Standards department, which is responsible for enforcing the bylaw.
Grant said the city works closely with the Ministry of Transportation to validate driver’s licences. They also do regular compliance audits and “third-party data-scraping,” but he said he could not disclose all of the “investigative techniques” the city uses to verify someone’s principal residence.
Since the bylaw took effect, the city has revoked more than 1,000 registrations and told Airbnb and other short-term rental platforms to remove more than 81,000 listings, Grant said.
Airbnb, which denies that short-term rentals have any impact on rental prices, now pays the city $1 for every night booked on its platform, per the bylaw. The company must also remove a listing within 24 hours of receiving a request from the city.
“We actually do it within, like, 30 seconds,” said Nathan Rotman, a policy director for Airbnb, explaining how listings are automatically removed or converted to 28-day minimum stays as soon as someone from Toronto’s bylaw enforcement team clicks a button on a private, data-sharing website the company created to comply with municipal regulations.
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Rotman, who oversees all of Canada and 17 U.S. states for Airbnb, said Toronto’s bylaw is both “extremely restrictive” in terms of its regulations and “extremely robust” in terms of its enforcement.
City inspections come with advanced notice, firm says
The property management companies approached by undercover Star reporters had no apparent fear of Toronto’s bylaw enforcement. They did not hesitate to provide advice on evading the principal residence requirement.
“Basically, what the city asks when you apply for this … is a copy of the driver's licence,” said a sales representative for GlobalStay, a short-term rental hosting company. “So the address on the driver's licence needs to match the address of this apartment. That's all they ask.”
The sales rep said the company’s clients will often have different family members from the same household register multiple units.
“We have families that have four or five units and every member of their family is (on paper) living in a different apartment,” she said, adding that none of the company’s clients have had any trouble with the city. “So far, so good.”
Ninety-nine per cent of the time the city doesn’t inspect, she said. “Like, they don't come in and take a look if that person is actually residing there.”
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The sales rep for The Bay Suites suggested the city has a slightly higher inspection rate, claiming they will verify one out of every 10 registrations. But you will get advance notice of any inspection, he said.
“So when they come you gotta be there.”
Grant, speaking for the city, would not say what percentage of registrations bylaw officers physically inspect, only that inspections are conducted “on a case-by-case basis when deemed necessary.”
He said there are 8,100 short-term rental operators in the city and nine bylaw enforcement officers tasked with enforcing the bylaw.
Bylaw enforcement officers respond to complaints made to 311 about potential violations and also conduct proactive investigations, Grant said. Most people follow the rules, but chasing the rule-breaking minority can be a little like whack-a-mole, he said.
“As they pop up, we whack ‘em.”
Neither The Bay Suites nor GlobalStay responded to questions for this story.
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'Good months, you'd be looking at $18,000-$20,000'
The companies contacted by the Star charged a 15- to 20-per cent commission for a package of short-term rental services, including cleaning, listing and managing all aspects of the booking process. They also employ data-driven, dynamic pricing to take advantage of surges in demand.
The sales rep for The Bay Suites said jumping through a few hoops to skirt the bylaw’s rules would definitely be worth it to get the short-term rental licence.
With a two-bedroom at 300 Front St. W., he said you could make $16,000 a month with short-term rentals.
“Good months, you'd be looking at $18,000-$20,000.”
Renting out a two-bedroom at 300 Front St. W. as a short-term rental could fetch $16,000 a month or more.
Lance McMillan
The sales rep also said that if we had trouble finding a family member to fake their principal residence, there are other “ways around” the bylaw.
“I would not like to disclose it over the phone,” he said. “But there are ways around. … You don’t even need the licence. There are other ways.”
Five units owned by the same couple
There are roughly 8,000 housing units registered to host short-term rentals in the city. Most are concentrated in high-rise condo towers downtown, near the waterfront and entertainment district.
The Star cross-referenced the short-term rental registration data, as of October, with public property records and found that in the 10 buildings with the most registrations, nearly half of the units — about 48 per cent — are owned by people who list another location as their primary address.
Many of these registrations are likely legitimate, as tenants are also allowed to register for short-term rentals in their principal residence.
The city said 35 per cent of short-term rental registrations across the city are by tenants, and in the top 10 buildings with the most registrations, the average rate is 48 per cent, according to a freedom-of-information request obtained by the Star in December.
But the Star found several cases that raise questions.
Across the 10 buildings with the most registrations, more than two dozen individuals or corporations own multiple short-term rental units, including Aiman Sattar and Farooq Sheikh, who co-own five apartments at 300 Front St. W., all of which are listed on Airbnb.
Sattar, whose cell phone number has a New York City area code, deferred questions to her and Sheikh’s lawyer, Mohamed Kala, who said by email that they are compliant with all city bylaws. One of Sattar and Sheikh’s units is Sattar’s principal residence and the other four have long-term tenants, he said.
“In a nutshell, my clients are vanilla.”
Grant, the city executive in charge of bylaw enforcement, initially told the Star that Sattar only has one short-term rental registration and is abiding by all the city’s rules.
He subsequently said by email that the city is investigating all of the short-term rentals associated with Sattar and Sheikh “to ensure that the principal residence requirement is being complied with.”
Rentals at Ice Condos raise questions
The data also raises questions about short-term rentals at ICE Condominiums, the high-rise towers at 12 and 14 York St. in the Harbourfront neighbourhood.
Property records show 88 of the 234 units at Toronto's ICE Condos registered for short-term rentals are owned by someone whose mailing address differs from the unit itself.
Tenants in the buildings are prohibited by the condo board’s rules from hosting short-term rentals. Property records show 88 of the 234 units registered for short-term rentals are owned by someone whose mailing address differs from the unit itself. These people are either breaking the condo’s rules or the city’s.
There were four self-identified tenants in the Ice Condos registered for short-term rental, according to the data obtained through freedom of information laws. In an email, Grant said the city is “in the process” of revoking licences of self-identified tenants who broke the condo’s rules.
Neither the city, nor ICE Condominiums provided an explanation for the other registrations.
The Star also contacted several people who own two or more short-term rental units in the ICE condos. An artist said she and her husband used both of their units as principal residences, one as a living space and the other as a studio. (The bylaw is clear that you can only have one principal residence.) Another investor-owner said his son lived in one unit, but could not explain how he met the principal residence requirement of the other.
In a statement, management for ICE Condominiums, which earlier this year signed an agreement with Airbnb to make it the exclusive short-term rental platform for the buildings, said enforcing the principal residence requirement is the city’s responsibility and “we continue to call on the City of Toronto to increase enforcement efforts.”
The statement said ICE Condominiums works closely with the city to ensure residents comply with the condo’s and the city’s rules for short-term rentals.
“Through this work we recognize that the city requires more resources to effectively enforce the bylaw, as action by the city is often slow.”
Grant said staff are currently reviewing the short-term rental bylaw, including potentially strengthening the verification and enforcement of the principal residence requirement. This will require “significant new resources,” he said.
Toronto should beef up bylaw and enforcement, experts say
Wachsmuth, Canada’s leading researcher on short-term rental regulations, said Toronto’s bylaw has definitely reduced the number of dedicated short-term rentals in the city, even if it is not being enforced to its fullest extent.
“There are still clearly lots of people lying and breaking the rules,” he said. “But there also are clearly far fewer non-principal residence short-term rentals than there used to be.”
Proving someone’s principal residence is a “genuinely hard problem” for the city, he added, because it doesn’t have a “clear, independent way” to verify it.
But Wachsmuth and others think Toronto should be more proactive in its enforcement efforts given the stakes of the housing crisis.
It’s critical to get units “back to the (long-term) market,” said John Pasalis, president of real estate brokerage Realosophy. “Like any policy, half of it is enforcement. If there are no consequences to breaking the rules, then it's not going to do anything.”
Thorben Wieditz, executive director of advocacy group Fairbnb Canada Network, said he would like to see more documentation required to prove one’s principal residence and a more rigorous verification process, including more proactive inspections of buildings where short-term rentals are most lucrative and the incentive to violate the bylaw is greatest.
Thorben Wieditz, executive director of advocacy group Fairbnb Canada Network, said he would like the City of Toronto to implement a more rigorous verification process for short-term rental registrations.
Andrew Francis Wallace
Mariana Valverde, professor at the University of Toronto’s Centre for Criminology and Sociolegal Studies, said one idea that might aid enforcement efforts is moving responsibility to the province, which has more capacity. B.C. recently passed province-wide legislation that will start in May of this year cracking down on rentals listed on sites like Airbnb.
In November, the federal government announced a new tax measure to remove incentives for owners renting out properties on a short-term basis, and new money for municipalities to enforce regulations.
Grant said he hopes some of those extra enforcement dollars will come Toronto’s way. He said the city currently spends about $2 million enforcing the short-term-rental rules, but it isn’t enough. When staff complete a review of the bylaw and report back to council early this year, they will be recommending increasing fees to help boost enforcement, he added.
