Thousands of Toronto AirBnB investors plan to sell this year

Thousands of Toronto short-term rental investors could give up. An Ipsos survey, commissioned by the Toronto Regional Real Estate Board (TRREB), shows how investors plan to navigate the city’s new short-term rental rules. Only a third believe their investment will not be affected by the new rules. The rest are considering either selling or finding long-term tenants for their units. This could mean that many new housing offers will hit the market over the next year.

Toronto Short Term Rental Rules

The City’s new short-term rental rules are similar to what other major cities have been doing for years. Accommodation must be registered and will be limited to main residences. Renters will also need to register and collect a 4% accommodation tax. There are a few other rules, but these are the most important details. The biggest change is the requirement for units to be primary residences. This should eliminate units purchased specifically for AirBNB and ghost hotels – a collection of units managed by a single property manager.

Most investors plan to sell or rent to long-term tenants

The survey found that only a third of short-term rental investors feel the rules affect them. Just under a third (32%) of investors believe they will not be affected by the plans this year. I don’t know how a short term rental investor is unaffected, but let’s forget about it for today. The rest will come out of the short-term rental game. The largest group said it would sell the property over the next year, accounting for 40% of respondents. A smaller, but still substantial asset, 26% of investors said they would look for long-term tenants. It can add a lot of supply to the market without any additional buildings.

Toronto short-term rental investor plans

How short-term rental owners plan to meet Toronto’s new short-term rental regulations. Source: TRREB, Better living.

This could add nearly a year of housing supply

There are no official figures on short-term rentals, so it’s difficult to determine exactly how much that means. Analysts like FairBnB estimate between 14,000 and 20,000 short-term rentals in Toronto. Using the survey to estimate, this could mean that between 5,600 and 8,000 units would be put on the market. From 3,640 to 5,200 other units could be leased. That can add almost a year of housing supply, in just a few months. It also does this without putting further pressure on labor and land costs, which have skyrocketed due to the shortage.

An important note is that this particular type of sale is a net benefit to the offer. When investors sell, they are not likely to buy another home immediately, unlike owners. Toronto also doesn’t expect investors to sell short-term rentals. The same survey found that a significant number of general investors plan to sell within the next year. For the first time in a very long time, the Toronto real estate market could be well supplied.

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