CCI Manitoba Chapter News

Regulating Short-Term Rentals – More thoughts

Summer has been fairly quiet at Winnipeg City Hall on the short-term rental (STR) file, with no mention of it appearing on the various meeting agendas or in meeting minutes since June. CCI Manitoba will continue to monitor and keep you informed as best we can, via our newsletter, our social media channels and our website newsfeed. As has been the case in the past though, the most effective advocacy efforts rely on our members to educate themselves, stay informed and communicate their thoughts to their City Councillor.

If you have been following the City of Winnipeg discussions, you’ll recognize that the Toronto regulatory model has frequently come up. Our CCI Toronto Chapter held a panel discussion on the topic in the spring, a recording of which is available.[1] For any Manitobans interested in the topic it is well worth watching. Here are some points of interest for consideration as various municipalities here in Manitoba think about establishing regulations. First of all, it is a lengthy process to plan, implement and sustain the new regulatory environment, so patience and perseverance are required. Toronto started doing their research in 2016-2018 and had their bylaw ready in 2020 with registrations being accepted starting September that year, followed by a four-month education blitz. Enforcement started January 2021 and it is worth noting that there have been numerous violations, so just having regulations in place should not be viewed as a panacea – municipalities must be ready to investigate and take corrective actions right from the start.

The Toronto bylaw and many others, restrict STRs to the operator’s primary residence. While most operators are respectful of the community and conscientious, some are unscrupulous, looking for loopholes, and the primary residence requirement has a few loopholes. The requirement was put in to the regulations because it was thought that if the owner was just renting out a room rather than the whole unit, their presence would ensure good behavior from their guests. The first loophole was discovered by snowbirds who disappear for several months of the year. While their listed unit is still their primary residence, they are nowhere near if problems result. As well, owners who travel regularly as part or their job can list their whole unit as an STR while they are away. Again, although a primary residence, the owner is not on the property to ‘assure’ proper behavior of the renters. A second loophole is that if the unit is rented out long-term, the tenant can claim it is their primary residence, and register it as an STR, with or without the owner’s knowledge.  There have been reports[2]  in which an owner of multiple units has friends and family members listed posing as tenants for a specific unit, registering them as STRs yet living elsewhere, allowing the owner to effectively have multiple units registered.

Some other municipalities were mentioned in the podcast, including Mississauga, which has additional requirements for the operator to be compliant with CC bylaws and the declaration and get permission from the CC to operate an STR. Even now in Manitoba though, there are some opinions that STRs are in violation of many CC declarations, yet until tested in court, no legal precedent has been set. Which CC wants to be the first to take an operator to court and incur the associated costs? As to getting permission from the CC, we have seen at least one CC Board so dominated by STR operators, that permission would be a moot point.

An interesting and lengthy news article mentions several Ontario municipalities struggling to control STR related problems in cottage country,the lessons from which can be applied to condos.[3] It seems that most renters and hosts are responsible and respectful of the neighboring community but a few bad actors are ruining it for everybody. Properties are rented out as party destinations and “People who come on the weekends and pay $750 a night feel entitled to do what they want”, much to the chagrin of the inhabitants of the neighboring properties. Again, while a few bad apples spoil the bunch, “good operators vet their guests, lay out the rules and expectations and that they enforce them, ejecting those who fail to abide by them”. 

Another article[4] mentions some of the enforcement activity and a side-effect of the introductions of regulations in Toronto – “42 per cent of commercial short-term rentals — properties where there is no permanent resident — returned to the long-term rental market once the city’s bylaw took effect”. While this obviously put a damper on many STR operator’s revenue stream, it did relieve some pressure on ever increasing long-term rental rates by returning many units to the market.

Enforcement activity is not without its own problems either, as documented in a CBC News item[5] which described mass cancellations by AirBnB due to “a minor discrepancy in how their address is listed on their City of Toronto registration versus how it appears on their Airbnb profile”. This resulted in disrupted travel plans and loss of booking revenue, with a mass scramble to arrange alternate or replacement accommodations. Anyone who has worked with databases containing names and addresses are familiar with the difficulty in matching records because of inconsistent spelling, abbreviations and the like.

One final aspect of the STR discussions is the problem of human trafficking and how it can go undetected in a condominium property. Any CCs allowing STRs should be aware of the signs of human trafficking, their potential liability and the need for policies, procedures and rules to mitigate the associated risks. A law firm associated with CCI Toronto, Elia Associates, has an informative article that serves as a good starting point for CC Boards to prepare themselves.[6]

All in all, any municipality will struggle to understand all of the aspects of STRs while they develop, implement and enforce regulations. Condo owners and operators should expect a few bumps along the long and winding road to a stable and effective regulatory environment. Ultimately, the success or failure of the regulations will depend on the effectiveness of the municipalities complaint management process, including having sufficient resources to investigate and enforce. In the absence of regulations, if you were to call your municipality with a noise complaint and it was not resolved, new STR regulations will likely not help resolve future noise complaints.