City proposes new restrictions on Airbnb, other short-term rental units

Airbnb photo

Operators of Airbnb units and other short-term rental accommodations would be required to register with the city and would be allowed to offer space only in their “primary residences” under new rules proposed by city staff.

Owners who rent their properties on platforms such as Airbnb would be required to pay $100 for a permit that would be valid for two years. The proposed regulations would also prohibit corporations from operating short-term rentals, requiring permit holders to be Ottawa residents who are individual owners or renters of properties.

Such individuals would be required to provide proof of residence such as a lease or deed, and permits could be revoked if operators run afoul of the regulations. Grounds for losing a permit include criminal activity, unpaid fees, behaviour that endangers public health or safety and “repeated public nuisances.”

Condo boards and landlords would be allowed to exclude properties from the registry. Property owners would be allowed to rent out only one housing unit at any given time, although cottages and vacation homes in rural areas would be exempted from that rule. 

Staff said the new rules are designed to weed out so-called “ghost hotels” run by commercial operators. Critics argue that such operations reduce the stock of rental accommodation available to long-term tenants and disrupt residential neighbourhoods.

“No commercial operations would be permitted under the proposed rules,” the staff report says. “This measure is intended to protect the economic and social well-being of the municipality by preventing much-needed housing stock from being diverted to commercial (short-term rental) use.”

Citing data scraped from platforms as Airbnb and Expedia by a third-party researcher, the report says the number of “likely commercial operators” of short-term rentals in Ottawa grew from 349 in 2016 to 1,236 last year. The report estimates that overall revenue from short-term rentals climbed from $11.7 million in 2016 to about $39.8 million last year, with the number of overall rental listings rising from 3,343 to 6,278.

According to the report, complaints specifically related to short-term rentals rose from three in 2015 to 86 last year. 

“It is not always known or reported when (short-term rentals) is the root cause of a nuisance complaint and the city does not currently have the administrative processes or regulatory tools required to link specific service requests to (short-term rental) addresses,” the report says.

“Staff have also been made aware of specific cases where tenants were evicted to make way for (short-term rental) activity and have met with communities where high concentrations of (short-term rental) activity have caused material erosion to the quality and character of their neighbourhoods,” staff added.

Hotels, motels and traditional bed-and-breakfasts would be required to obtain permits under the new rules, but would be exempt from the residency requirement.

In a statement, Airbnb public policy manager Alex Dagg said the proposed new regulations would reduce the number of short-term accommodations available and impose “unnecessarily onerous requirements” on the platform’s hosts.

“These recommendations will only serve to punish the thousands of responsible Ottawa hosts who use Airbnb as a means to support their families and we encourage councillors to listen to the concerns raised by their local community and ask city staff to revise their report,” she said.

Among other recommendations, the report calls for the creation of a new enforcement unit that would include up to four bylaw officers who would investigative complaints and alleged violations. 

Staff estimate it would cost about $900,000 to enforce the new regulations in the first year and $834,000 in the second year. Those costs would be covered by permit and registration fees as well as the existing four per cent municipal accommodations tax that hotel guests and people who rent rooms through Airbnb have been required to pay since last year. Airbnb voluntarily agreed to the tax, but all short-term rental operators would be required to charge it under the new proposal.

If sufficient revenues aren’t available from taxes and fees, staff are suggesting the hotel tax be raised to 4.25 per cent to cover the shortfall.

“Discussions are currently underway with the Ottawa Gatineau Hotel Association and Ottawa Tourism to review current revenues to determine if there is capacity to fund the proposed regulatory regime without increasing the Municipal Accommodations Tax rate,” the report says. “It is anticipated that discussions will conclude by the end of Q1 2020.”

The City of Toronto imposed similar restrictions on short-term rentals last year, but they are currently being challenged at the province’s Local Planning Appeal Tribunal. No date has been set for a decision.

The city’s community and protective services committee is expected to consider the report at its next meeting on Nov. 15.