Short-term rental regulations are costing Ontarians billions

The impact of STR regulations

One key driver of this rent inflation is that landlords can charge significantly higher rates to tourists than long-term tenants. In July 2023, commercial hosts earned an average of $6,700 per listing, nearly five times the average monthly rent of $1,408 in Ontario.

A staggering 41% of Airbnb listings in Ontario are operated by commercial hosts who convert residential properties into "ghost hotels," with the top 10% of commercial hosts generating 44% of total STR revenue in the province.

In December 2023, STRs were taking 12,860 housing units off of Ontario’s long-term market. This was a 11.2% increase compared to December 2022.

In the cities that have implemented principal-residence restrictions on STRs, rent impacts are modest. Only an estimated 1.9% of Ottawa’s rent growth in 2022 was caused by STR activity. But compare it to a high-tourism city without those regulations, like in Niagara Falls, where an estimated 41% of 2022 rent growth was caused by STR activity.

"Housing planned, approved, and built to accommodate Ontario residents should not be repurposed as ghost hotels," said Wieditz.

"The province establishes housing targets, and it has a responsibility to prevent these housing-to-hotel conversions, which reduce housing supply and contribute to rising rents."

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Province-wide regulations

The paper argues that Ontario should follow BC’s lead in introducing province-wide STR regulations for all communities that don’t already have them.

Canadian neighbourhoods with principal residence restrictions in place at the beginning of 2023 had rents that were $50 less than they would have been without those restrictions — a 3.3% difference.

The result is that STR regulations across Ontario are currently saving Ontario renters more than $1 billion each year in lower rent payments. If Ontario were to extend principal-residence requirements to all communities that don’t currently have them, this would be expected to save Ontario renters at minimum a further $572 million per year.

"These findings offer compelling evidence that STR regulations, including principal residence restrictions, successfully reduce rental costs in various municipalities across Ontario," said Laura Murphy, senior housing policy advisor at the Advocacy Centre for Tenants Ontario.