Rent My Condo! By The HOUR….

Condos

6 minute read

September 4, 2013

Yes, that’s right, folks!

Many of downtown Toronto’s finest condominiums are available for rent, by the year, month, week, day, or believe it or not, by the hour.

Thanks to blog reader IanC for feeding me this story, and bringing to our collective attention an issue that is at the forefront, whether we’re aware or not…

ForRentByTheHour

Let’s not jump to conclusions here.

I’m sure you could do a LOT of things in a motel, apartment, or condo for an hour.

You could play a quick game of Monopoly with a friend!  Or, since Monopoly is competitive, can ruin friendships, and might cause your wife (or girlfriend at the time) to reference the side of you known as “Monopoly Dave” in a negative light, you could always play Snakes & Ladders

You could bake a cake, let it cool, and cover it with frosting – all with time to spare to have a bite!

You could watch back-to-back episodes of Frasier, and re-live the mid-1990’s.

You could even watch “Jays in 30,” twice!

But I know where all your minds are going.  When I say “rent a room by the hour,” you’re thinking, well, what most people would think.  And I don’t blame you.

I also don’t blame a client of mine, who lives in a downtown Toronto condo, for freaking out last week when he made a rather interesting discovery: there was nothing in the condominium declaration to keep residents from renting out their condos by the hour.

Does that surprise you?

Well, in actual fact, “John,” as we’ll call him, was checking up on rules and regulations regarding renting rooms by the night, since he had found units in his building up for rent on B&B websites.  But as the conversation and investigations went on, he rhetorically asked, “What’s to stop somebody from renting out the room by the hour?”

Nothing, as it turns out.

This all started when John found a condominium unit in his building listed on www.airbnb.ca for $97 per night, and read the reviews on the building.  The reviews were extremely positive; this wasn’t the problem!  The problem was that the reviews were raving about how easy it was to pick up the keys for the unit at concierge!

Really?  You can pick up the keys at concierge?  So residents in the building are using the concierge as a crutch to run their B&B?  Interesting…

John spoke to the property manager in the building, who looked into the condominium declaration, and found the following nugget regarding leases in the building:

“There is no minimum term for the lease of a unit, nor shall the Board of Directors impose a term.”

This is both good, and bad, at the same time.

On the one hand, you don’t want to be tied down by restrictions, and you don’t want the Board of Directors filling the declaration with rules and regulations for every little issue.

On the other hand, this rule might be a bit short-sighted.

John consulted a lawyer, and continued to work with the property manager to find out what their options are, but as many of you know, it takes 90% of residents to vote in order to change a by-law, under the Condo Act.  It’s probably next to impossible to track down 90% of condo owners, given how many units are owned by international investors, or even investors that don’t live in the city.  But to get 90% of owners to vote on something is out of the question.

John and the property manager put their heads together, and decided that concierge would no longer be permitted to hand out keys to “hotel guests.”  Not only that, they were no longer permitted to “check in” guests, as if they were bellhops in a hotel.

No, the Board of Directors and property manager would not be able to outlaw the renting of rooms by the hour or by the night, but they can certainly stop making it so easy!

For those of you that might not agree this is an issue, let me list off the problems and concerns with allowing residents to rent out units by the night:

1) Security

Some of us live in condominiums because they are more secure.  There is a locked front door, a concierge at a security desk, an elevator that might only provide access to each floor with a FOB, and a lock on the front door of our condo.

So what happens when we start handing out keys to strangers?

What happens when Dieter & Gustav show up after a long flight from Germany and decide to crash for $97 per night in your neighbour’s condo?  Do we trust these guys?  Do we know them?  Do we want them having access to the amenities, parking garage, locker room, parking, etc?

How does a single woman feel, walking through a dark parking garage at 12am after a long shift at work, knowing that “hotel guests” from around the world could be anywhere in the building?

I’m I an alarmist?  Or is this just common sense?

2) Accountability

Who is accountable when something goes wrong?

If a “tenant” happens to be passing through Toronto for one night, and rents a condo as if it were a hotel room, then how do you track that person down if something goes wrong?

What if the “tenant” costs the condominium corporation money in some way, ie. they break the front door, stall the elevator, throw up in the hallway, drop a bookshelf off the balcony onto the hood of a moving car as it passes by (that one’s a true story!), or does anything that would present a problem for the condo corporation, property management, or the other residents?

You simply can’t have people passing through, and I’m willing to bet that these “landlords” aren’t keeping sharp records on the tenants.

3) Stature

I think it goes without saying that we all consider our condominiums “investments” to a degree.

We might not check up on the value of our home every single day, like we would with 1,000 shares of Research in Motion, but we do realize that the value of our condo can go up and down.

We’re also aware that various factors affect the price fluctuations, and that reputation and stature is one of those things.

So if the general public, more specifically – the buyer pool, considered a given condominium building to be “a zen for backpackers looking to crash for the night,” wouldn’t that have an affect on resale value?

If your car ranked poorly in crash-test ratings, and an article came out about poor gas mileage the very day you were listing it for sale on Auto Trader, you’d surely be affected, right?

I think residents operating B&B’s out of condominiums is the exact same thing…

4) Business versus Residential

Most condominium declarations point out that the condo unit has to be used for residential purposes, and not commercial.  Business can NOT be run out of condos, as per most declarations.

This is why we see “live/work” zonings highlighted on MLS listings, trying to attract the graphic designers and artists of the world, looking for a condo where they can run their business, as well as cook their meals, and sleep in between busy days.

Commercial properties come with higher property taxes, they are financed at higher rates, and they require a larger down payment.

Commercial properties are not in any way equal to residential properties.

So shouldn’t we make the distinction?

Isn’t running a B&B out of a condominium a “business?”  I think so.

If somebody continuously rents out their unit, each night, to different people looking to rest their head for eight hours, then this IS a business!

 


 

John emailed me last week and told me to check out this link: https://www.airbnb.ca/rooms/633778

That’s a condo unit for lease in my building at 112 George Street!

This story hits so close to home!

How do I feel about somebody renting out a unit by the night, or by the afternoon?  I don’t like it at all.  It could be dangerous, and it shows that people in the building (both residents and those who work for the residents), have no idea what’s going on under their own roof.

I’m not being naive here and suggesting that every person who rents a condo by the hour is an intravenous drug user, or that a massive cocaine deal is going down each time a condo is rented for an afternoon.

But consider that a condominium declaration specifies (almost always) that a parking spot can only be rented to another resident of the building.  This is done for safety reasons (or all the reasons I noted above), to prevent a non-resident from gaining access to the building on a regular basis.

So why is a parking spot any different?

I understand that you can’t draw the EXACT same line, ie. a condo in the building can only be leased out to an existing resident, because that makes no sense whatsoever.  But along the same line of thinking, and with the same methodology, you can see why a resident shouldn’t be allowed to lease their unit for an extremely short duration of time.

How long that time period is, would be up for debate.  Perhaps this is why we’re finding such a grey area.

But it seems this is becoming more and more of an issue, and I’m sure this isn’t the last time we’ll have this conversation…

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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21 Comments

  1. AndrewB

    at 7:28 am

    I generally have the impression that those who use airbnb are generally good people and aren’t hooligans. I used airbnb once to get a place for new years downtown. There’s some loops to jump through and you’re practically interviewed. Then you’re required to review each other after the stay. Airbnb is the mediator in problem situations.

  2. AndrewB

    at 7:40 am

    Also, from my experience renting a condo with airbnb I’d say the process was very transparent. I didn’t notice anything unusual and definitely didn’t see any rowdiness in the condo, and this was New Years Eve.

    Airbnb hosts have to rate you, and you have to rate them after the stay. Signing up for the first time, you have to go through a lot of hoops to get a place. Make a good profile, with a picture and speak with the host of the property. IT’s not as simple as book and go. There’s a lot of hoops to jump through and I can’t see horrible guests wanting to go through all that to stay in a condo for a night to be stupid. There’s a hotel for that. Plus, with airbnb, you can impose cleaning fees, etc. It just doesn’t make sense for someone without the best intentions so IMO, it’s a bit alarmist to assume all of those issues.

  3. RLST8Rocks

    at 11:00 am

    Thanks David for this article. I think the whole idea of renting one’s condo for the night even if the by-laws permit this or don’t clearly ban it is appauling. As a single female and realtor this makes me feel less likely to move into a condo. period. I’ve heard through the grapevine about all sorts of condo shenanigans but the people to blame are the condo’s management and their by-laws that need a re-drafting. I would not want my building turning into a Super 8. Don’t be fooled by thinking this will not affect your resale value as you know every building has a “reputation”. Fight to change this!

  4. IanC

    at 11:58 am

    I see people who post airbnb ads also post twin ads on craigslist and elsewhere (where they can avoid airbnb fees). Where’s the high level of screening in that ? And why should a corporation like airbnb or any other company be allowed to vet the paying nightly hotel guests in my residential building ?

    As an owner resident, I do not want to live in a quasi hotel, regardless of how well behaved (or not) guests are. I have not polled anyone, but I would bet that most owner residents feel the same way.

    In addition to reputation and property values, what about maintenance fees? Elevators are mechanical machines that wear down with use, and carpets don’t last forever. When you have guests dragging heavy suitcases through constantly – elevator maintenance and carpet cleaning/maintenance will increase costs for all residents. Not to mention newer condos with often fewer elevators where suitcases take up the space of people, and can add to elevator wait times.

    There are buildings near the airport with low prices per square foot where investors are taking advantage of residents, in my opinion, by renting out large numbers of suites short term.

    If someone had the option to buy two different condos, and all else was equal – I would suggest that they review the condo bylaws regarding short term rentals make an informed decision. I also believe that Condo Lawyers should highlight the short term rental bylaws with every client.

    Lastly – some condo bylaws allow investors to up to 30 days to provide renter contact information. Shouldn’t the management office be allowed to know who is currently living in the building that they manage?

  5. TheDonald

    at 12:36 pm

    WTF? My investors get shagged (along with 1King) for the residential/hotel tax variance and some “Jenny” is renting her peed da tire for $200?

    A note on the door explaining that you’ve ratted them out to CRA will nip Miss Jenny’s global hospitality aspirations.

  6. PartyPenguin

    at 1:56 pm

    I’ve wondered about the same thing with my current building. We hired two 24/7 guys for the front desk because they are swamped with packages but I see that they spend lots of time giving out keys / instructions for “corporate rentals” / daily rentals quite often. In fact, they even seem to have a binder dedicated to these rentals.

    I think that residents are getting fleeced since short term renters are more likely to use the limited facilities (notably the rooftop pool) and are clearly taking up a chunk of concierge’s time since they use them like they would a hotel’s concierge.

    And guess what I end up discovering? One of the board members runs a sizeable short term corporate rental operation with several units in the building. How do you put a stop to this?

    1. Hal 9000

      at 3:25 pm

      Take a deuce. Put in fedex envelope. PLace under door and squeeze.

  7. Frido Bandito

    at 4:06 pm

    I’m more concerned about other owners who already disrespect their buildings by tossing cigarette butts off of balconies, leaving garbage next to the chute, not cleaning up after their dogs pee on the carpet, park their own vehicles in visitor parking, etc.
    If people want to make some money on their place that’s their business. You wouldn’t know about it otherwise unless you saw your building on the Airbnb website.

    1. IanC

      at 11:07 pm

      That’s a good point, certainly, there are disrespectful owners and and the same time, there are polite and considerate renters and hotel guests. No argument there.

      And depending on the volumes – you might never know that your neighbours are renting their suite by the night unless you go to craigslist, kijiji, airbnb, etc.

      But just wait as this becomes more popular and more lucrative. As short terms rentals increase, there is no question that residents will lose out and feel the change of atmosphere of their home and surroundings.

      Investors buy into a residential building to make money – which they are entitled to. However, resident owners should also be able to move into a vertical residential neighbourhood – with fellow residents; both owners and renters, WITHOUT the liability, expenses, and concerns that go with transient nightly hotel guests, who are often anonymous.

      At least a hotel knows who has checked in – people have to provide a credit card or photo ID.
      What about a condo where bylaws give investors up to 30 days to identify “residents” to management, which could be 29 days AFTER they have already checked out?

      Let me tell you – as an owner resident – I am concerned about investors (including individuals owning multiple suites or even blocks of suites) renting to transient hotel guests. That’s not what I intended to sign up for when I bought a RESIDENTIAL condo. Let’s get the CRA and the city of Toronto onto these investors who don’t claim income from rentals and get away with paying residential tax rates when they are operating a business!

      And maybe Toronto can follows New York City’s lead and protect residents!

    2. ScottyP

      at 9:08 am

      Hear hear, Frido.

      Half of my neighbours are ingrates, and I live in one of the more in-demand buildings in the city. Why should I suddenly expect them to start behaving like first-class citizens with respect to how or to whom they decide to rent out their units?

      Don’t like such shenanigans? Start a campaign to get the 90% vote required, or start searching for a property that puts a higher priority on vetting those who walk through their doors. For that’s really what all of this comes down to, doesn’t it?

  8. dave

    at 10:37 pm

    Restricting rental revenue will simply increase the number of units for sale, and discourage some buyers.

    1. IanC

      at 11:30 pm

      Yes, restricting rental revenue will discourage some buyers. But so would bylaws that restrict marijuana grow ops – some buyers would be discouraged from from those restrictions.

      Whatever encourages the most number of buyers is not necessarily the fair and right way to go.

      Reasonable rental guidelines would certainly discourage hoteliers from buying blocks of units in residential condos. I do not disagree that it could add up to a lot of sales in certain condos where short term rentals are rampant.

      But protecting residents’ interests can encourage other residents to buy or even to stop from selling and moving out! Owner residents also buy their fair share of condos, and people like RLST8Rocks below don’t as they say, want to live in a “Super 8”.

      There needs to be some balance. Owner residents where allowed should be able to also rent their suites out without undue restrictions, for whatever reason or life event. However – renting out suites by the night does not meet my criteria of being reasonable in a residential condo. I would like to see the city get involved and do what New York did and ban short term rentals from residential condos.

  9. JJ

    at 8:31 pm

    David, I live at 116 George on the 11th floor where “Jenny’s” hotel unit is operated. For months I have seen different people coming and going and asked a few of them if they were visiting etc and eventually also discovered the lovely airbnb listing attracting all of these transient visitors. I am concerned for my safety as these people are unknown to the condo corporation. I also do not appreciate repeated annual condo fee increases which are likely in part a result of increased usage of amenities, cleaning, and specifically the fantastic concierge service that receives great reviews. As a resident and homeowner, why am I paying for someone else’s front desk check-in service?? What are the potential impacts on the corporation when one unit owner illegally operates a business from a residential unit? Does city of Toronto bylaw enforcement apply only to the unit owner or the entire corporation?
    I have not complained to the management company for fear of angering a nearby resident and creating tension where I live. What can I do to protect my rights on an anonymous basis?

    1. David Fleming

      at 11:43 am

      @ JJ

      You should definitely complain.

      This problem is becoming more and more prevalent, and any time I’m in the downtown core, and I see two people lugging suitcases with a map in their hands – I know they’re going to an airbnb listing.

      I’ve been in condos before (320 Richmond this weekend) where the tourists are asking for the keys at front desk from the concierge!

      I don’t like this at all…

  10. Katelouise

    at 12:18 am

    Renting for an hour or a day is a security issue. We never knew what the person is doing under our roof , but considering other side of coin, some one who really needs to stay for short duration and can opt for a condo nearby will not harm the security an with little bit of personal information about the one hiring , any once can responsibility for accountability . For renting a room or condo in Toronto easily you can click here.

  11. Trent T

    at 11:29 pm

    David,
    Wake up. If you don’t like the rules your condo has established, then move. Truth is, most condos don’t allow short term rentals. The ones that do are very smart – by appealing to investors by giving them more flexibility. I handle corporate furnished rentals (typically 30-60 days in length). These clients work for major corporations and are professional- making better tenants than most standard renters.

    I’d encourage you to really think about all sides before going on some silly, uneducated rant.

  12. Bryans

    at 8:41 pm

    1. Many transient guests are well behaved and many are hooligans or are downright inconsiderate of any other residents. Permanent residents should not have to worry about who is staying next and how if that “guest” will impose a negative impact. (Assuming their condo declarations prohibits short term rentals).
    2. Transient renters (such as Airbnb guests are a liability to the entire condo corporations.
    3. Big insurance liability as most condo or rental policies do not cover damage (ie flood caused by running tap etc) caused by transient renters. If the unit owner can’t pay the corporation will be left to foot the bill resulting in increase of maintenance fees or special assessment.
    3. Increasing guest traffic will undoubtedly lead to maintenance fee increases resulting in reduced property values.
    4. Most condos do not allow short term rentals. Some do. It’s in each condo corporation’s by-laws and/or rules.
    5. Short term rentals such Airbnb are terrific in settings where they do not violate rules or by-laws.

  13. Hourly Spaces

    at 3:42 am

    The Ideas isn’t bad as it seem by reading some of the comments, I assume; but one thing I really want to mention here is that whoever wish to rent the condos hourly basis need to very astute and sure of what they proving otherwise risk always looms over heads.

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