Airbnb is trying to fend off the threat of strict regulations in Toronto with new numbers the company says show its “home-sharing” business is having little effect on the city’s tight long-term rental market.
City officials are set to begin drafting new rules to govern short-term home-rental websites such as Airbnb, which has launched court challenges of new rules imposed on it in New York State and the company’s hometown of San Francisco.
The hotel industry complains that Airbnb is competing unfairly, avoiding taxes and other costs. Other critics say the service is resulting in the saturation of desirable Toronto neighbourhoods with “ghost hotels” – properties that are let out on Airbnb full-time – squeezing out regular long-term tenants.
But in a study being released Tuesday and co-authored by Airbnb’s head economist, former Harvard Business School assistant professor Peter Coles, the company says that of the 9,500 active listings it had in Toronto last year, only 760 could be considered competitive with conventional long-term rentals.
Those 760 full units brought in at least $16,100 a year, or the equivalent a landlord would receive from a long-term tenant paying the city’s average monthly rent of $1,339. The typical Airbnb listing for an entire unit in Toronto brings in much less, just $6,560 a year, the company says, with 46 per cent rented for less than 30 days.
And if those 760 units were instead all put onto the city’s long-term rental market, Toronto’s vacancy rate of 1.6 per cent would likely stay the same, according to the company’s report.
Even if every unit remained empty, the vacancy rate would rise only to 1.76 per cent, it says, before the market absorbed the new units.
“It’s pretty clear that the number of units of housing that are being rented on our platform that could potentially be pulling away from long-term housing is pretty minuscule,” Airbnb spokesman Christopher Nulty said, adding that his company was meeting with city officials and accepts the need for regulation.
The Airbnb report comes on the eve of a debate at Toronto Mayor John Tory’s executive committee over the impact of Airbnb on Wednesday. Vancouver is currently drafting new rules that are expected to restrict the practice to a homeowner’s principal residence. Other cities, such as Chicago, Seattle and Philadelphia, have brought in regimes to control Airbnb-type rentals and ensure operators pay hotel and sales taxes.
Airbnb maintains the majority of its users are people who occasionally rent out their property or a room in their own home, as a way to bring in extra cash to make ends meet. Only a small minority, the company says, are commercial operators running larger-scale operations.
A report from city staff says 68 per cent of Airbnb rentals in Toronto last year were for entire units. And 37 per cent of all listings belonged to an operator with more than one listing. Nine per cent of Airbnb hosts here had five or more listings, the report says.
The staff report lays out a plan to begin consultations and report back next year with potential options for regulatory schemes. Last week, the head of the Greater Toronto Hotel Association urged the city act faster.