Fair Rules for the Short-Term Rental Industry
An Overview of Airbnb
and the Hotel Sector in Canada: A Focus on Hosts with Multiple Units.
Recent years have seen an abundance of accommodation-sharing platforms and short-term rentals serving Canada and the world – the most popular of these being Airbnb. In Canada, the average number of active Airbnb units has almost doubled in the past 2 years.
What started as true home sharing – where the owner is present during the guest’s stay – has expanded into a growing trend: people using these platforms to become commercial operators. This means that multiple units or whole homes are being rented out on a consistent basis. Effectively, these operators are running illegal hotels within existing residential housing.
What This Means For Canadians:
- Affordable housing is lost, as Airbnb and similar platforms convert long-term rental units into short term rentals. This has decreased the supply of affordable housing units, which has exacerbated an already acute housing shortage in many of Canada’s largest cities.
- Lost tax revenues for governments and cities.
- Impacts to local communities, as nuisance, disruption and crime are increasingly reported.
- Guests are potentially at risk, as there may not be any health and safety standards or inspections in place, no insurance, or there may not be any personnel on site to handle issues.
Proposed Solutions and Recommendations:
The traditional lodging industry welcomes competition and is prepared to compete in the marketplace based on price, brand and quality. However, the industry is being asked to compete on an uneven playing field. The existing laws and regulations in Canada are not designed for the 21st century sharing economy and, in turn, have allowed new entrants such as Airbnb and similar platforms to avoid compliance with business responsibilities normally associated with commercial activity.
- We are calling on the Federal Government to amend the Excise Tax Act to create a more level playing field for hotels, in relation to the short-term rental industry. Airbnb and similar online platforms should be required to charge and remit HST on the service fee charged to hosts and guests, and pay income tax on their profits.
- We also recommend a focused review of the overall rules for all players involved in the temporary accommodation sector, with a view to achieve fairness.