How to fix Toronto's short-term rental problems in 2017

From Rosedale"party houses" with bouncers at the door to drug-dealing "mobile units of criminal activity," Toronto Coun. Kristyn Wong-Tam has heard countless complaints about Toronto's burgeoning short-term rental industry.

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And as her downtown ward has become a hotspot for short-term rentals, the Ward 27 councillor has been pushing for the city to regulate the fast-growing market.

The municipal licensing and standards division has begun studying how to do that and will make its recommendations to council's executive committee in June 2017.

In the meantime, thousands of Toronto properties are being rented out in an "entirely unregulated" market, and Wong-Tam said some of her constituents aren't happy.

"It's very, very disruptive," Wong-Tam she said.

In Toronto's tonyRosedale neighbourhood, Wong-Tam says short-term rentals are less frequent but there's a problem with "party houses" being rented out for special events.

"All of sudden you've got security guards, speaker systems, folks charging [cover] at the door," the councillor said.

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And in areas where there are more high-rise buildings, Wong-Tam says the growing number of short-term guests is changing the character of some condo buildings.

"People are coming in and out of the building, nobody really knows who they are," she said. "There isn't the same sense of neighbourly behaviour."

Wong-Tam said she is even getting complaints about prostitution and drug dealing taking place, creating what she calls "mobile units of criminal activity."

"The drug dealing can happen through Airbnb in a random condominium suite and then disappear and pop up somewhere else."

Problems 'incredibly rare'

Despite the complaints, Airbnb continues to be a hugely popular service with roughly 8,600 hosts in Toronto. And problems, according to a company spokesperson, are "incredibly rare."

"The overwhelming majority of Airbnb guests are respectful travellers," Alex Dagg said in a statement to CBC Toronto.

The company focuses on the financial boon it has been for thousands of Airbnb hosts in Toronto by providing an "economic lifeline that helps them pay the bills or even afford their first mortgage," the statement said.

While there's concern that Airbnb could be shrinking the long-term rental supply, the company says 81 per centof Toronto hosts are renting their primary residence, "and are doing so a few nights each month to earn modest, supplemental income."

'Illegal hotel rooms'

But hotel owners say that income comes at their expense.

"They're running in direct competition with us," Terry Mundell, the president and CEO of the Greater Toronto Hotel Association, said in an interview.

Mundell bluntly calls Airbnb listings "illegal hotel rooms".

And he said they have an unfair advantage over their legal counterparts; Airbnb hosts can undercut hotels on price, because they don't pay the HST or corporate business taxes.

Airbnb hosts can also operate in residential neighbourhoods, but hotels aren't permitted because of zoning restrictions.

Mundell, however, said he doesn't have a problem with home-sharing it just needs to be regulated, he said.

"Regulate it, zone it, tax it and we'll compete."

Regulation and the Uber experience

The Airbnb regulation problem for Toronto is a complex one, but the person in charge of finding the solution is hoping her recent experience will make it easier.

As the executive director of the city's municipal licensing and standards divisions, Tracey Cook navigated city hall through the tumultuous process of regulating Uber, another enormously popular but disruptive technological change that shook up a major industry.

"Uber was quite an initiative, a lot of uproar. I'm hoping the Airbnb file will be considerably less than that," Cook said in an interview with CBC Toronto.

During that shakeup, the city also made changes to the rules that governed the taxi industry, something Cook said could happen with its Airbnbreport. The city is also currently exploring a hotel tax that could also be applied to short-term rentals as part of the municipal budget.

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The regulatory framework city staff will propose could include changes to zoning bylaws or licensing Airbnb hosts, butCook saidit's still too early to give any hints about exactly where they're heading.

Consultation with stakeholders and public meetings are planned for the new year.

"Our goal is to speak to as many ofthese groups as we can and get a sense of the goods, the bads and uglies," Cook said.

Cook also saidstaff will also review regulations that other cities have imposed on Airbnb to see whether similar rules could work in Toronto.

"We have the benefit of not being the first."