Toronto’s housing crisis is being fuelled by the emergence of “ghost hotels” — profitable, short-term rentals posted on websites like Airbnb that are replacing long-term rental housing — a Toronto Star/Munk School of Global Affairs and Public Policy investigation has found.
While Airbnb markets itself as a way for individuals to rent their homes when they’re away, there are more than 1,700 Airbnb usernames in Toronto listing more than one entire property for rent — an indication they are either commercial property management operators or enterprising individuals becoming de facto landlords, an analysis of data from the independent research site insideairbnb.com reveals.
With more than 5,000 listings, these short-term rental entrepreneurs account for over a quarter of the more than 20,000 Toronto listings on Airbnb.
Some of these Top 10 “ghost hotel” hosts include “Emil & Sue” (96 listings), “Toronto Suite Rentals” (79 listings) and “Steve” (55 listings).
The result: Thousands of rental units are now being filled with tourists instead of Torontonians, say experts.
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“Housing stock that might otherwise have been available for long-term stays … are being eaten up by short-term stays and the reason is it’s simply more profitable,” says Leilani Farha, United Nations Special Rapporteur on the Right to Adequate Housing.
“Airbnb needs to take a look at their operation and determine whether they are in fact doing no harm in terms of the right to housing for local residents living in cities … (And) governments (must) ensure that the most vulnerable populations, and now even middle-class populations, can afford to live in the cities in which they work and live.”
Toronto, like most cities, did not have regulations around short-term rentals. But city officials decided regulations were necessary to curb negative impacts on the housing market. Passed by council in 2017, the city’s bylaws are not yet in effect because they are being contested by several Airbnb hosts and are scheduled for review at the Local Planning Appeal Tribunal (LPAT) this August.
In a written statement, Airbnb spokesperson Alexandra Dagg said the majority of Airbnb hosts in Toronto are sharing their homes with visitors to help make ends meet. This majority includes those renting only their primary residence or only a room in their home, which would fall onside of the new bylaws.
“We take any impact on affordable housing seriously, especially in a city like Toronto that is facing unique challenges. That is why we shared comprehensive data and detailed information about our community with the city throughout the regulatory process,” said Dagg in an email statement.
About 16 per cent of the country’s 90,000 Airbnb hosts are in Toronto where just over a million Airbnb guests arrived in 2018. On average, Toronto hosts book 87 nights a year, typically earning $ 9,500, according to Airbnb. But for those managing properties as a profession, the earnings are much higher.
“If [rental unit owners] rent it out to a tenant for a year, they make maybe a maximum of $ 2,500 a month for a one-bedroom [in downtown Toronto],” says “ghost hotel” entrepreneur Alex Tsoy, sales manager with Toronto-based property management company Simply Comfort Estate, which had 40 listings on Airbnb as of March.
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“With us … our customers, on average, made about $ 4,100 a month.”
The largest number of Airbnb listings in Toronto as of March shows ICE Condos at 12-14 York St. at the top with 300 listings — more than 20 per cent of all units in the buildings.
“The number of listings is typical for downtown buildings,” said a spokesperson for DUKA Property Management Inc., manager of ICE Condos, in an email statement.
“The declaration of ICE Condominiums permits short-term accommodations,” adding that 23 per cent of the building’s units are listed on Airbnb.
Many condo boards do not allow short-term rentals, however, condos.ca lists ICE Condos as one of a few Toronto buildings that do. It is located in the Waterfront Communities neighbourhood in Ward 10 (Spadina-Fort York), which has the largest share of listings overall.
“By removing those units (from the long-term rental market), (Airbnb) inflates prices across the spectrum (by increasing competition for those that are left). And the one affordable unit that was available, now you have to compete with people with more income,” explains Thorben Wieditz, spokesperson for Fairbnb — a coalition of tenants’ groups, condo associations, rental landlords, and hotel groups.
According to a recent report from Fairbnb, if Toronto’s short-term rental regulations restricting entire home listings were enforced, up to 6,500 non-compliant listings for entire homes could be added to Toronto’s long-term rental market immediately. The total number of Toronto Airbnb listings increased by almost a quarter in 2018, the coalition says.
Airbnb’s Dagg says that figure “overestimates the real activity.”
“There are many more listings available than booked … (and not everyone) who has more than 90 nights booked in a year is a commercial or professional host, and thereby not a primary resident.”
While she acknowledges the presence of commercial operators on the site, managing homes for other owners, she does not think they are automatically at odds with regulation.
“We also have people who look like they have multiple listings, but they’re property managers and there’s nothing wrong with that. Lots of people do that. It doesn’t necessarily mean that person owns 20 different condos and is putting them all on Airbnb rather than renting them long-term.”
Secondary investment homes would not be permitted under the new bylaws.
Toronto’s vacancy rate is 1.1 per cent, according to the Canada Mortgage and Housing Corporation’s Rental Market Survey.
“A healthy rate is 3 per cent,” says Joe Cressy, city councillor for Spadina-Fort York, the ward with the most ghost hotels in Toronto. “To create a truly affordable and livable city, we must take out the investor-driven ghost hotels … Airbnb can be part of the solution or part of the problem. Currently they’re part of the problem.”
A short-term rental can be an entire home, or a room within that home, that is rented for less than a month at a time.
Tsoy’s Simply Comfort manages more than 80 properties in the GTA, according to its website. The company relies on real-estate agents and commission-based referral programs to increase the number of properties under its management. They sign year-long leases, with an option to cancel within the first few months.
A team of designers and photographers help develop a “professional listing” which is posted to Airbnb and other similar sites.
The company tagline reads: “we help to double property income.”
Tsoy says his company is growing and looking to expand to other markets, including Vancouver.
“Obviously,” says Tsoy, “they earn more with us without any hassle.”
One example of a neighbourhood where people once lived for years or even decades is Yonge and Eglinton. Now apartments and new condos are routinely posted at over $ 100 a night.
One of those buildings is 45 Dunfield Ave., a long-term rental building in midtown.
Several of the Airbnb listings for units in the building are now posted by the user name “Emil & Sue” — one of the top 10 Airbnb hosts in the city. The property management firm behind that username is Olivia’s Housing.
The building’s owner, Shiplake Properties, has a deal with Olivia’s Housing to provide short-term rental tenants, according to a company representative over the phone who declined to give her name.
“We don’t do short-term rentals … well, except with Olivia’s Housing,” she said.
The company did not respond to further requests for comment.
Emil Joseph, founder of Olivia’s Housing, said some units are listed multiple times to boost search results, “so the 96 listings is actually 32 listings.”
Airbnb has been growing aggressively and has set itself the target of reaching more than one billion annual guests by 2028. Currently there are over six million active listings from nearly three million hosts in 191 countries — more than the top five hotel chains combined.
Valued at more than $ 38 billion (U.S.), Airbnb may be publicly traded next year.
Globally, the platform says it is growing at about 14,000 new hosts a month. Its hosts earned over $ 41 billion (U.S.) in the last 10 years.
Most major cities are creating bylaws where a short-term rental can only be operated from a principal residence and capping the number of days each year owners or tenants can rent through Airbnb or other rental sites.
For example, London and San Francisco cap short-term rentals at 90 days. In Los Angeles and Paris, the cap is 120 days; in Tokyo it is 180. And New York bans them outright unless the host is present.
Toronto city staff recommended a cap of 180 days. Council agreed and passed it as one of the new bylaws.
Vancouver is the first major city in Canada to implement regulations, aimed mostly at commercial operators scaling their operations in what was a “legal grey” zone. As of last fall, all short-term rental operators in Vancouver must have a business licence and include it in all online listings and advertising, or face fines. The rental must be the host’s primary residence, although it may include secondary suites if the operator lives there full-time. The fee is $ 51 and hosts can apply online.
However, businesses and commercial operators are ineligible and can face fines up to $ 10,000.
In August, there were 6,600 unregulated listings in Vancouver. On Sept. 1, Airbnb took down 2,400.
Over 100 properties face prosecution or had their licence suspended.
(Lindsey Vodarek is a communications and social policy expert who explores issues of income and housing with a human rights lens. Swathi Meenakshi Sadagopan is a senior consultant on the data analytics team at Deloitte Canada and has a Master’s degree in electrical engineering. They are Fellows in Global Journalism at the Munk School of Global Affairs & Public Policy, University of Toronto.)