Read the related post: Short Term Rentals vs the Residential Tenancies Act in Ontario
With the introduction of AirBNB, Short Term and Medium-Term Rentals have surged in popularity. This is due, in part, to the simplicity in listing an accommodation and its roots focusing on homeowners who simply wanted to rent their place while they were away. But like most businesses, they are subject to laws, rules and regulations. With residential accommodations, these rules can be complicated with lots of inter-play between various legislative acts. This article aims to point you in the right direction to ensure you look for the rules you may need to abide by. You should obtain advice of legal and accounting professionals to ensure compliance to the laws which apply to your circumstances and jurisdiction.
Stays typically measured in days or weeks, these accommodations are meant for people who truly need temporary housing. The usual purposes are similar to a hotel or motel and may involve vacation, work related travel, family visits, weddings among many other similar reasons. Guests normally have another permanent address but need temporary shelter while away.
While many new entrants into this area of business feel that they are not subject to any rules, this is rarely a valid assumption. Depending on where your business is operating, at least the following areas of legislation need to be considered:
For an example of what a Hotel needs to consider see reference [7] which provides the Greater Toronto Hotel association’s legislative update.
Stays typically measured in months, these types of accommodations are typically meant for people who need a semi-permanent arrangement, but it is not intended to be their permanent residence. Common examples may include temporary work assignments, extended vacation (e.g. summer vacations), waiting for a new house to be built, etc. Normally the guest will have another address where they normally receive mail though in certain circumstances this may not be strictly true (e.g. when waiting for a home to be rebuilt after say a natural disaster).
This type of accommodation often falls within the grey area between Short-Term Rental and Long-Term Rental and in most cases, there are no laws specific to medium-term rentals and thus the laws should be interpreted as either a short-term rental or long-term rental. In most cases, operators will choose to interpret the laws as short-term rental where convenient. The choice of interpretation can be important. For example, if an operator chooses to abide by most STR laws but not to collect HST as may be required for an STR then if a challenge is brought by a tenant before the Landlord Tenant Board then this could be used as evidence to support a tenant’s claim that they are a long-term tenant and subject to the protections of the Residential Tenancies Act.
While many choose to define this as stays typically measured in years, intent of the accommodation plays a larger part. It is completely conceivable that a tenant residing in a hotel or motel can be defined as a long-term tenant and offered the rights, obligations, and protections of the Residential Tenancies Act (see reference [4]).
Generally, these accommodations are intended for tenants who plan to live there for an indefinite period and have no other permanent residence. In Ontario, unless a tenancy falls within a limited number of exemptions within the Residential Tenancies Act, the act will almost certainly apply. Interpretation in Ontario is within the domain of the Landlord Tenant Board and normally occurs if a tenant chooses to challenge the nature of their relationship with the property owner.
As with most other business operations, a long-term accommodation business is subject to at least the following:
One area that is often overlooked by STR and MTR operators is insurance. In most cases, insurance is provided with an assumption as to the nature of the business. If for example, a building is insured for long term residential use, an operator can be exposed if they use one or more units for STR. If a guest were to initiate a suit for, say, a slip and fall and they were staying in an STR unit, the building’s insurance may not cover this. Insurance policies general distinguish between short term vs long term stays either by the nature of the stay or in many cases the number of days a tenant typically stays. We have seen policies where a short-term stay is defined as 30 days or less and others where stays are typically at least a year. It is important to consult with an insurance broker to ensure your operation is properly covered.
Some booking platforms (such as AirBNB) also offer insurance, and many do not. Regardless, it is important to understand the interplay between these policies and the building’s policy to reduce potential gaps. In some cases, a broker may also recommend an umbrella policy to help cover potential gaps.
Understanding the differences between these types of business operations is essential to help reduce liabilities while ensuring a quality customer experience. Consistency in operation is often your friend to help support positions of intent. It is also important to note that legislation changes over time and that the above lists are not exhaustive. You may find it interesting to search on applicable laws for hotels and see if any of those could potentially apply to you or even benefit you. But again, if you pick and choose laws that may benefit you it can weaken your position to claim those benefits while increasing your liabilities.
Offering customers choice in experience is a great thing as well as potentially being lucrative but take the time to manage your risks.
[1] Ontario’s Residential Tenancies Act: https://www.ontario.ca/laws/statute/06r17
[2] Ontario’s Innkeepers Act: https://www.ontario.ca/laws/statute/90i07
[3] Hotel Registration of Guests Act: https://www.ontario.ca/laws/statute/90h17
[4] What does the Landlord & Tenant Board look at when deciding whether my unit is protected under the RTA?:
https://www.nipissingcommunitylegalclinic.ca/wp-content/uploads/2020/02/Motel_Pamphlet.pdf
[5] Toronto’s Short Term Rental By-law home page: https://www.toronto.ca/community-people/housing-shelter/short-term-rentals/
[6] Ottawa’s proposed Short Term Rental By-law: https://ottawa.ca/en/news/new-short-term-rental-law-designed-help-address-housing-shortage-and-community-nuisances
[7] Greater Toronto Hotel Association Legislative Update: https://www.gtha.com/legislative-updates
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