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Two condo buildings in the Distillery District. Toronto is considering hiring outside contractors to build up its short-term rental monitoring systems.

Fred Lum

The City of Toronto is in the process of designing a regulatory and enforcement regime for short-term-rental (STR) operators. But if the experience of other cities is any guide, the new rules could kick off a high-stakes game of cat-and-mouse with hosts bending the rules to continue their lucrative businesses.

This spring, Toronto will begin registering short-term-rental operators. It will then begin enforcing the rules first passed in 2017. Those rules were upheld in 2019 by the Local Planning Appeal Tribunal after commercial STR hosts filed an appeal.

“The City will first focus on educating the public about the new regulations. City staff will also work with both short-term-rental operators and companies to ensure compliance,” said Carleton Grant, executive director of the municipal licensing and standards division. “The city has the authority to cancel registration rights of short-term rental operators, if a short-term operator does not carry out activities with integrity and honesty, violates any federal, provincial or municipal law or bylaw, or conducts activities in such a way that infringes on the rights or endangers the health and safety of the public.”

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As recently highlighted in The Globe and Mail, many short-term rental operators may already be violating the city’s existing bylaws around rooming houses and the provincial fire code.

The Globe highlighted the case of a listing calling itself “The Mansion” in North York, a single house for which there were 35 individual listings. The operator was known to have hosted more than 20 people at a time in triple-bunk beds packed into almost every room in the mid-century house at 1 Toba Dr.

After the story appeared, local councillor Jaye Robinson’s office notified the licensing and standards department and an investigation was opened. On Feb. 21, bylaw investigators issued a notice to comply with zoning and an order to comply with property standards.

A spokesperson from Airbnb said that when a listing is brought to their attention that could affect the safety of the community they may take action against a listing – including suspension or removal. To date, 1 Toba’s host, listed only as “Walter,” still has an active account. The “Mansion” listing has been taken down, but his account still shows a second rented house being sublet on Airbnb at 411 Carlton St., although his profile is filled with automated reviews notifying users he has cancelled many coming stays.

Harmari STR, a compliance services company active in many U.S. states, did a data analysis of Toronto to estimate how widespread the rooming house issue was. The company’s Toronto-based chief executive officer, Allen Atamer, searched the database the company has built for commercial clients – including 15 condo buildings in Toronto and 47 municipalities in North America – for “listings that include the keyword ‘bunk’ in their reviews, plus any [STR] listings that advertise over 12 guests.” More than 400 examples with multiple bedrooms and claims of being able to accommodate between 13-18 guests at a single property showed up on such platforms as VRBO, Airbnb and Booking.com.

“It’s still the wild west in this industry,” Mr. Atamer said.

Harmari STR got its start nine years ago in an earlier era of digital disruption, when it would analyze sites such as Kijiji and Craigslist for police and motor vehicle regulators seeking information about those using the classifieds platforms as a vector for stolen cars and other forms of insurance fraud. “We are applying that expertise and skill to STRs, to find and identify them. Without knowing where they are [cities] can’t police them. That’s where the gap is with the platforms and municipalities,” he said.

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Harmari examines 60 sites that do short-term bookings, although Airbnb is still the market leader estimated to control close to 80 per cent of Toronto’s listings.

Some listings Harmari found sublet as many as seven bedrooms per house, well above the city’s limit of three per STR site, and some even advertise their likely status as an unlicensed rooming house in the listing name: “Toronto 6 Bedroom entire House”, “Lavish townhouse w/ sauna & jacuzzi - Sleep 18”, and “81 Fancy Entire House for Up to 20 people”.

“[Airbnb’s] whole business model hinges on them downloading responsibility to thousands of individual hosts and not being held accountable for what they post on their platform,” said Thorben Wieditz, an activist and spokesperson for the Fairbnb coalition that has pushed Canadian cities toward harsher regulations on the industry.

Toronto’s bylaw says hosts can rent up to three bedrooms in a unit for an unlimited number of nights a year (up to a maximum of 28 days per stay) or their entire home for a maximum of 180 nights a year. The major roadblock for commercial operators in Toronto’s bylaw is a restriction that only a host’s principal residence can be used for short-term rentals.

According to Mr. Atamer, there are already more than 30 large-scale property management companies operating STRs in Toronto – some with 100 or 200 rooms under management – that could evade this rule today using a web of identities.

“One of the classic examples I can give, you see an Airbnb hosted by a very attractive female blond, in the reviews it’s all comments about her ‘friend Yuri’ handling the listing. You’ll see him 20 times in the reviews, and then in other reviews on other listings. It’s all a façade,” Mr. Atamer said.

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So far, Harmari’s Toronto clients have been condo boards that ban short-term rentals, and the service is also attractive to buildings with an integrated hotel component – such as the former Trump Tower, now the St. Regis Hotel, at 325 Bay St. – that property managers are loath to undermine.

Mr. Atamer said Toronto hosts attempting to evade scrutiny are also beginning to borrow a tactic his company has identified elsewhere: vampire listings.

“Vampire listings pop up at night and go down during the day, they are trying to hide from condo security guards, from bureaucrats and others,” he said. In a snippet of research Harmari published last year, about 12.6 per cent of the 4,914 STR listings in Fort Lauderdale, Fla., were intermittent “vampire listings” that hosts remove and repost every day. Sonoma County, Calif., a popular wine region, saw 14 per cent of its 5,156 listings behave the same way.

According to a spokesperson for licencing and standards, Toronto is considering hiring outside contractors to build up its monitoring systems. A contract to build the registration system was awarded to accountancy giant KPMG, but a request-for-proposals for the investigative tools has not been awarded yet.

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