A provincial tribunal has ruled in favour of Toronto’s plan to put stricter regulations on the city’s short-term rental market.
The Local Planning and Appeal Tribunal (LPAT) made its decision Monday, nearly two years after the city first approved the bylaws.
Under the rules, Toronto will require short-term rental operators to live at the home they list on sites such as Airbnb.
Operators will also be allowed to rent a maximum of three bedrooms in their home or their entire property. They will be required to register with the city to rent out space in their homes.
In his ruling, adjudicator Scott Tousaw described the regulations as “good planning in the public interest.”
“This is good news for Toronto residents and a step in the right direction when it comes to regulating short-term rentals and keeping our neighbourhoods liveable,” said Toronto Mayor John Tory Monday in a written statement.
The regulations are essentially designed to increase the availability of long-term rentals by decreasing the number of homes eligible to be listed on sites like Airbnb and VRBO.
However, the rules were not implemented due to multiple appeals made to the LPAT, formerly known as the Ontario Municipal Board. The appeals were launched by several short-term rental operators seeking to challenge the city’s bylaws.
The LPAT ruling means the city can now move ahead with the regulations.
Ana Bailão, Toronto’s deputy mayor and housing advocate, said the ruling strikes a fair balance that will benefit both tenants and homeowners looking to leverage their properties.
LPAT rules in favour of City’s short-term rental by-law: regulation is a “reasonable balancing…has a solid basis and planning rationale.” After a long appeal, we can now move forward protecting long-term rental suites while still allowing short-term rentals where reasonable.
Airbnb and other companies operating in the short-term rental market will now be required to pay a one-time license fee of $5,000, plus $1 for each night booked through their platform.
Rental operators will also be charged with a four-per-cent municipal accommodation tax on all rentals that last less than 28 consecutive days.
Thorben Wieditz of Fairbnb, a coalition that represents the hotel industry, along with property owners and tenants, called the decision a “major victory for tenants across Ontario.”
The LPAT decision notes that some 5,000 units could return to the long-term rental market with the new regulations, though that number may also be somewhat lower, depending on how operators respond to the changes.
“Whatever the number, one fact is indisputable: each dedicated [short-term rental] unit displaces one permanent household. That household must find another place to live,” Tousaw wrote.
“This phenomenon is occurring in increasing numbers in Toronto’s residential areas, the very places that are planned, designed and built to provide housing for residents.”
With the booming sharing economy and travellers often preferring to forgo traditional hotel stays, the notion of renting out a room in your home (or the entire house itself) could seem appealing. But before you jump into peer-to-peer short-term rentals, there are some things you should consider:
Costs of hosting: starting up, cleaning, higher utility bills and more
Becoming an Airbnb host requires some startup cash along with ongoing expenses. These include the costs to set up and furnish the space, ongoing utility and cleaning fees which is usually not more than $30 per room.
You’ll want to make sure each guest space is attractive and has all the amenities that a weary traveller needs such as fresh backup sheets and plenty of towels. A savvy host can reasonably furnish an empty room for about $1,000. However, $500 can do the trick if you already have an extra bed. Big box stores can help supply furniture for a range of pricing.
The upside of being a host is that if you work hard, possess excellent customer service skills and treat the platform like your own personal business, the revenue generated from the listing can surpass the initial startup costs and provide a nice monthly return.
If your property is controlled by a homeowners’ association or co-op, check its rules to make sure you’re allowed to host; some may restrict Airbnb activity, while others may have no issue. If you rent, you’ll want to get your landlord’s blessing.
A proportion of Airbnb hosts could very well be renters, who may or may not be telling their landlord. It is recommended to get your landlord’s approval through a signed agreement. In most Canadian provinces, tenants cannot rent out their apartments without the approval of their landlords.
Airbnb Canada details here how tenants should go about this process.
Taxes and business licenses
Depending on where you live, you might require a business license and you might owe local taxes on any income you earn.
Quebec law requires short-term rentals of less than 31 days to obtain a licence from Tourism Quebec. Vancouver has proposed regulations that only allow the issuing of short-term rental licences for a primary residence — meaning the host, whether owner or tenant, must live in the dwelling. This rule targets hosts with multiple investment properties who operate as commercial hosts and eat into the housing stock.
Toronto has proposed a two-pronged approach to licensing, requiring both companies such as Airbnb and hosts to register and pay an annual fee. Hosts of short-term rentals in Toronto would be required to pay an annual fee ranging from $40 – $150.
As tax is a relatively complex topic, Airbnb has provided some information about local regulations in different Canadian markets. Above all, it’s good to consult a tax professional to get more specific information.
Clean + Declutter
You’ll want to tidy your space, present it in the best possible light and hide your valuables before you photograph it.
Like the listings you love to peruse here on REALTOR.ca, the photos and listing title are the first thing a potential guest will see on Airbnb. This is your opportunity to catch their attention.
You can either take your own photographs or contract out a professional photographer. Many hosts opt for professional shots, given how important eye-catching photos are for your space’s profile.
Before photographing, ensure that you prep by arranging suitable lighting conditions and use a quality camera (now available on most smartphones).
Insurance and liability
Airbnb’s Host Guarantee provides up to $1 million in insurance coverage for property damage in 29 countries, including Canada, the United States and the United Kingdom. Airbnb’s insurance is not a substitute for homeowner’s or renter’s insurance and it doesn’t protect against theft or personal liability.
Airbnb states that damage to a host’s property (home, unit, rooms, possessions) in every listing is covered up to $1 million USD. However, hosts must provide documentation as part of the resolution process. Payments made through the Host Guarantee are “subject to Host Guarantee Terms and Conditions,” meaning there are exclusions, limitations and conditions. As well, it’s common for Airbnb hosts to receive emails from Airbnb, at random, informing them that various terms and conditions have changed.
Call your insurance company to see what is covered, as some home insurance policies cover short-term rentals. But if there are multiple short-term visits, the insurance company might require you to buy a business policy that would cover a hotel or a bed and breakfast.
Airbnb’s host guarantee doesn’t protect against wear and tear to your place, but you can charge a security deposit to cover possible damage.
Installing a reasonable security deposit is a no-brainer move for new hosts. Airbnb allows hosts to set up a security deposit to cover minor damages that would not be covered under the Host Guarantee. For example, if a guest breaks a door handle while staying at your property, you’ll want to replace that before the next guest comes.
However, Airbnb won’t consider this damage to be major and won’t cover it under the Host Guarantee. As a result, this becomes an out of pocket expense for you, unless you charge the guest a security deposit. When guests make a reservation, they are not immediately charged for the deposit – only if a host makes a claim.
Even if a host is only renting a single room, a security deposit is a safe move just in case anything gets damaged.
Airbnb could require you to refund a guest’s payment if you cancel a reservation at the last minute, forget to leave the key, misrepresent your listing, don’t clean your home or otherwise fail to meet Airbnb’s hospitality standards. Airbnb suggests making sure you’re available during the guests’ scheduled check-in to address any concerns.
Airbnb’s payment system is quick and efficient. Payments are sent through direct deposit after the guest completes their first night (regardless of the length of stay).
When a guest books a host’s space, they also agree to the host’s cancellation policy, which dictates the percentage of the booking costs (minus Airbnb’s cut), if any, they will get back. Most moderate policies allow a guest to cancel within two days of the first night to get their money back. Less moderate policies allow the host to collect more of the booking money.
Host cancellations also happen from time to time. One study found host cancellations are the top complaint on Airbnb, representing about 20% of all complaints.
Depending on when a host cancels a stay, they’ll be deducted either $50 or $100. If a host cancels three or more reservations within a year, Airbnb may deactivate the listing.
To Airbnb or not to Airbnb
If you talk to enough long-time Airbnb hosts, they’ll be able to tell you an endless number of stories about inspiring and interesting guests who shared their home. Others might have bad experiences. There are clear potential advantages and disadvantages to becoming an Airbnb host.
However, if all the regulatory checks are taken care of, the space is up to par and you’re taking your hosting responsibilities seriously, the platform can serve as a nice way to earn extra cash and meet interesting travellers from around the world.
The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.
The plan will put a heavy focus on housing supply building tens of thousands of affordable housing units over the next decade and repurposing other cash to maintain housing supplements.
There are expectations that the plan will also include a new portable benefit that low-income renters can carry with them through the market.
Those are just two of a number of anticipated measures aimed at making housing in Canada more affordable, particularly for the 1.7 million households that are forced to spend more of their disposable income than they should on housing.
Prime Minister Justin Trudeau will be in Toronto to unveil the details of the plan, while Social Development Minister Jean-Yves Duclos travels to Vancouver to make a simultaneous announcement on the West Coast to mark National Housing Day.
Recently released census data found that 1.7 million households were in “core housing need” in 2016, meaning they spent more than one-third of their before-tax income on housing that may be substandard or doesn’t meet their needs.
Outside of Vancouver, the cities with the highest rates of core housing need were in Ontario. In Toronto, close to one in five households were financially stretched the highest rate of any city in the country.
The government hopes that building 80,000 new affordable rental units, along with billions more in spending over the next decade, will lift 500,000 of those families out of core housing need and help a further 500,000 avoid or get out of homelessness.
The details of how the spending will roll out are of keen interest to housing providers and cities. Municipal leaders have been meeting with federal officials this week to talk about the national housing strategy.
The Liberals laid the financial backbone for the plan in this year’s federal budget, promising $11.2 billion over a decade in new spending. About $5 billion of that money the Canada Mortgage and Housing Corp. is expected to turn into $15 billion by leveraging $10 billion in private investment.
Still, most of the money won’t be spent until after the next election in 2019, which concerns anti-poverty groups.
Those groups are planning demonstrations in multiple cities today, demanding the Liberals spend the full $11.2 billion before the next election.
Implementing a successful property management system is vital to the longevity, health and overall profitability of your growing portfolio of investment properties. Property management systems come in all different shapes and sizes, and can be completely tailored to your specific portfolio needs and wants. Rather than examining these different systems, which could take up an entire magazine, I want to explore three ways to increase your ROI by taking advantage of professional property management.
1. Set realistic expectations from day one
In my view, hiring a professional property manager is very similar to hiring an employee. You wouldn’t give a new hire a vague description of their tasks and responsibilities and then let them manage their job any way they want. You would give your employee a clear definition of their role and show them the kind of results you expect.
The same is true when engaging a property manager for the first time. The following are five simple questions to ask your PM – and yourself – as you’re working out the relationship. If everyone can answer every question definitively, you know you’re on the right track:
What is needed?
Who is doing what?
When will it be done?
How will it be done?
How much will it cost?
This may seem like a lot of work when you’re just getting started, but completing the above exercise will eliminate the roadblocks, misunderstandings and accidents associated with starting a new professional relationship, and will ultimately improve your ROI.
A professional PM will usually have all these roles pre-defined in their contract, but that doesn’t mean they can’t be challenged or negotiated to better suit your needs. Communicate above and beyond to maximize your results.
2. Hire a superintendent
This can be a hot topic depending on who you talk to – some investors dismiss the idea of hiring a super outright, and some absolutely can’t operate without theirs. I believe that if handled correctly, using a superintendent can be an effective management strategy for a medium to large building, especially if done in tandem with professional property management.
The greatest advantage of superintendents is that they live on site. This is extremely convenient when small issues arise that need immediate attention, like a spill in the hallway that needs cleaning or a tenant who needs to give you cash. For small, more regular tasks like mopping hallways and shovelling walkways, a super is usually the most cost-effective and efficient method. In my experience, waiting for your PM to deal with small items can take too long and not be as cost-effective.
I prefer my super to have a smaller role, meaning my PM handles all maintenance calls from tenants, major renovations, rent collection, tenant placement and regular reporting to me. It’s important to ensure the super is not impeding the job of your PM and vice versa. Each have their roles and should be complementary to each other. The PM is in charge, and the super is there to assist when needed, along with tending to a short list of responsibilities.
This PM-plus-super system frees up more time for me to focus on strategy, grow my portfolio and create value in my current assets. My accountant also appreciates the efficient system, as we save a fair amount of money on minor property maintenance with a super in place.
3. View property management as a service, not an expense
This is more of a way of thinking than an operational guideline. This particular piece of advice stems from years of wrestling with the same question over and over with my group of investors: “Paul, I like the property, and the numbers make sense to me, but when you factor in the cost of property management, the cash flow decreases, and the numbers are just average or below par. What do you think?”
There is no way to avoid the cost of property management. Either you are going to engage a professional to do it for you and pay for it out of the property’s cash flow, or you will handle the property management all on your own. You may think this will save you money or make your property more profitable. If you have spare time and energy and want to learn the business, I would encourage you to take on the PM responsibilities. However, if you’re busy with your career, family and lifestyle, like many of us are, by taking on the day-to-day management of your properties, you’re doing yourself a massive disservice.
Whether you pay a professional PM or not, it’s still going to cost you the same or more. By taking on the PM role, you’re going spend your own time, energy and gasoline and take away quality time for other activities you could be pursuing, like spending time with your family, getting some exercise (mowing the lawn doesn’t count), reading a book or sleeping. This may not sound like traditional ROI, but since most investors get into real estate to improve their lives, not just their bank balances, finding a good property manager will provide these other, highly attractive returns.
You cannot avoid the cost of property management. You either pay in dollars or you pay in your own time and energy. Either way, it must be done properly.
Source: Canadian Real Estate Wealth Magazine – Contributor 14 Nov 2017
Wasim Elafech of Century 21 Bravo Realty in Calgary is among the banner brokerage’s top sales agents in the world. Century 21 operates in 78 countries with over 100,000 agents, and Elafech managed to become their number one unit producer in 2015 and number three in Canada last year, so he knows a thing or two about getting the best bang for your buck out of a rental property. He shared some of those tips with us.
1. Maintain the property
Elafech says some he’s sold properties to clients who in turn rented them out, but without putting in the necessary work. “The work you do doesn’t have to be expensive, but it has to be brand new,” he said. “It will be liveable but it won’t look good. The floors will be cracked or peeling, and when people walk in they get the impression it’s a rundown property, but they won’t if you do the work. Make sure all the fixtures work, that they’re not broken; make sure door handles are loose or need to be replaced. If the place is well-maintained, 100% of the time you’ll get more money for your rental.”
Elafech added that properties are often reflections of the people who live in them.
“A really good tenant won’t look for a rundown place, first of all, so they wouldn’t take that place. You’ll attract the type of people your property looks like. People who accept living (in shabby properties) aren’t the best tenants.”
2. Bungalows yield higher rents
Bungalows are excellent rental properties because the top and bottom floor can be rented out as separate units. “One guy I know pretty much made his whole house different rooms with a common living room, couch and TV.”
Typically, however, the upper and lower floors of a bungalow can be rented as separate units. “Bungalows are the easiest houses to sell in certain areas here because you can rent the upper and lower levels, if it’s properly treated. In an area where you’re renting a whole house to a person, you’d get, say, $1,600 a month, but if you’re renting the floors separately, you can get maybe $2,200 a month. It’s about volume.”
3. Screen your tenants
Screening tenants adequately ensures your rental investment doesn’t become a nightmare. “I see it a lot,” said Elafech. “They don’t want to lose a month on the mortgage payment, so if it’s been sitting for a couple of weeks they’ll rush into a deal and rent it to whoever comes next, and sure enough the people either do a midnight run or don’t pay. I’m going through that now with my client.”
Elafech recommends waiting it out, even if that means the property sits empty for a month or two. Ask tenants for references and their job history. “If the tenant is reluctant, there’s usually a reason. Keep a look out for red flags.”
He also suggested hiring a rental management company if an apartment building, rather than two or three properties, needs to be maintained. While pricey, they’re well worth it – and they screen tenants.
Sometimes, though, less is more.
“I have a client that’s renting out a house with a garage for $1,000 month that usually goes for $1,800, because he has a good tenant. He cuts the grass and maintains the property. He does everything for the landlord, so that peace of mind is worth more than the money he’d get from renting the parking pad and garage in the back.
4. Rent the garage and parking spot separately
Elafech mentioned a rental property he’s currently showing. “The owner is going to park his trailer on the parking pad, rent out the garage and both floors of the bungalow separately – rental income from upstairs, downstairs and the garage.”
5. Location, location, location
Location is everything in real estate, so Elafech recommends investing in a property that’s surrounded by prime amenities like transit and schools.
“In Calgary, we have LRTs and buses. Even having shopping centres and schools nearby is important. A client had a condo with an LRT across the street, and he got more for it than a similar place he owns that had a similar layout but was a bit bigger, because it was six or eight blocks away and farther from the LRT. In Calgary, when it’s minus-40 outside, you’re not walking, or waiting for a bus when it’s cold. People pay for convenience.”
Earlier this week, the Federation of Rental-housing Providers of Ontario (FRPO) published a major report prepared by Toronto-based real estate market data firm Urbanation on the state of the Ontario rental market with a focus on the province’s largest region, the GTA.
A number of the report’s key findings will come as no surprise to those who have recently searched for rental housing in the city and surrounding region. Demand for rentals has hit multi-decade highs, according to the report, “driven by robust economic and population growth, job creation for prime renter cohorts, and a decline in homeownership affordability.”
While the report makes some encouraging observations on expected increases to the rental supply, the housing advocate concludes that a significant supply shortfall will remain and likely worsen unless the pace of construction ramps up quickly to meet demand.
Without policy action, the FRPO expects Ontario renters, especially those in the GTA, will experience mounting challenges in finding suitable housing.
Here are 11 stats from the report that illustrate the difficult market conditions that the province’s renters face:
1. The vacancy rate for purpose-built rental buildings sat at a 15-year low at the end of 2016. It was 2.1 per cent in the province and 1.3 per cent in Toronto.
2. The vacancy rate for Toronto condos — many of which are purchased by investors and added to the city’s rental pool — was even lower at the end of last year, sitting at a seven-year low of 1 per cent.
3. Eighty-five per cent of purpose-built rentals in Ontario are over 35 years old. Upgrading this aging existing stock will require a significant investment from rental owners, possibly to the tune of $5 billion over the next 5 years, the report estimates.
4. When looking at the age distribution of renters, the 25 to 34 year old demographic made up 21 per cent of total renter households in Ontario, making this cohort the “prime renter age segment.” The 35-44, 45-54 and 65+ age segments each made up 19 per cent of the total. Over the next five years, however, the prime 25 to 34 year old segment will see “accelerated population increases” thus further increasing demand for rentals.
5. Immigration to the Greater Toronto Area represented 30 per cent of Canada’s immigration total. Ninety thousand immigrants came to the region in 2016 and a similar number are expected to arrive in 2017. As the report notes, the majority of recent immigrants rent when they arrive.
6. After hitting a five-decade high in 2011, the homeownership rate in Ontario is expected to “flatten or decline in the next 10 years.” Affordability issues, higher interest rates and stricter mortgage policies are all expected to contribute to this trend.
7. By mid-2017, the cost disparity between owning and renting in the GTA remained at its highest level in more than five years.
8. On the rental supply side, purpose-built rental development reached its highest level since the 80s in both Ontario and the GTA. However, after the new rent control measures were unveiled as part of the province’s Fair Housing Plan, the rate at which new purpose-built rental buildings were proposed slowed when compared to previous quarters, with some projects originally proposed as rental even indicating a change to condominium.
9. On the rental demand side, the report forecasts that rental demand will outweigh supply by approximately 57,500 units over a 10-year period, or 5,750 units per year. This unit total “does not necessarily represent the level of additional rental development required to bring the market into a state of balance, but rather represents a level that keeps conditions from worsening over time.”
10. There is only one rental unit under construction per 1,000 GTA residents. In Vancouver, the ratio is over three rental units while in Montreal, it’s two units.
11. According to the report, rental starts need to double immediately and eventually triple from current levels just to satisfy demand.
Source: Buzz Buzz News Canada – Sean MacKaySep 27, 2017
Although there has been a little fluctuation in prices, the ultra-hot Canadian rental market continues to increase across the board.
While some city’s prices for one-bedroom rentals remained unchanged since last month, the most expensive in Canada has now surpassed $2000, according to the latest report by PadMapper.
Not surprisingly, Vancouver and Toronto continue their domination as the top two cities with the most expensive rental markets in Canada.
Last month, Vancouver’s median rent for one-bedroom showed a decline of 4.8%. But one month can change a lot in this market, and the price of a Vancouver one-bedroom has jumped up 1.5% from last month bringing it to $2,020. Two bedrooms have also gone up in the city, and are now renting at $3,160.
In Toronto, rent continues to increase every month as the city saw a 4.3% hike in one bedroom rentals, which are now $1,930. Two bedrooms also increased to $2,440. The most shocking part about rental costs in this hot city is that one-bedrooms in Toronto are up 15.6% since this time last year. Let that sink in for a minute. Actually don’t, time is money…
Trailing behind Toronto is Barrie, which also experienced a massive 15.4% annual growth rate over the past year. One and two bedrooms have settled this month with medians of $1,200 and $1,450, respectively, in the Ontario city.
Meanwhile, Montreal remained in fourth place. Rent in the popular Quebec city has experienced a 3.5% hike to $1,190, with two bedrooms now renting at $1,520.
Back to the west coast, where Victoria remains in fifth place with its median one bedroom costs increasing by 4.5% to $1,150, and two bedrooms growing slightly higher than last month to $1,490.
The largest drop in rental in Canada was in Quebec City, where one bedrooms dipped to $810, and two bedrooms went down 5% to $1,130.
But in Ontario, Hamilton climbed up three spots on the list to become the 11th most expensive rental market in Canada. This city’s growth rate for one bedroom units is up 5.3% to $1,000, and two bedroom rent grew 2.6% to $1,200.
Calgary remains steady, as one bedrooms are $1,020 just like last month, and two bedrooms also remain unchanged at $1,300.
The cheapest city to rent on the list is still Quebec’s Saguenay, which jumped a little to $640 for a one-bedroom, and $730 for a two bedroom. It’s probably one of the only cities in Canada where you never have to think about having a roommate these days.