Toronto’s short-term rental registry is grappling with significant inefficiencies, primarily due to outdated and manual processes, according to a recent audit conducted by the city’s Auditor General, Tara Anderson. The audit revealed that approximately 10% of approved short-term rental hosts may have violated city rules, and the lack of efficient data management is making enforcement increasingly difficult.

Inefficiencies in Oversight and Enforcement

The audit uncovered that Toronto’s licensing department still relies heavily on manual systems to oversee the city's 8,400 registered short-term rentals. This outdated method has proven inefficient and is severely hindering the city’s ability to monitor and enforce compliance. The findings were presented at the Toronto Council meeting in late July, where recommendations for modernization were unanimously adopted.

Violations of Toronto's Short-Term Rental Rules

Under current regulations, homeowners and tenants in Toronto can rent up to three bedrooms in their primary residence for a maximum of 28 consecutive days and no more than 180 days annually. However, the audit found numerous instances where these limits were exceeded. Additionally, it identified potential violations, such as multiple properties being rented under a single registration, further highlighting the need for better oversight.

Outdated Systems Hindering Municipal Accommodations Tax (MAT) Compliance

One of the audit’s major concerns is the reliance on outdated data management systems, which makes tracking and verifying the accuracy of municipal accommodations tax (MAT) payments a challenge. The report urged the city to adopt advanced analytics and automation tools to streamline oversight and ensure regulatory compliance.

The Need for Technological Upgrades

To address these challenges, the audit recommended implementing an application programming interface (API) to facilitate better information exchange between the city and short-term rental platforms like Airbnb. By automating data-sharing, this system could significantly reduce staff workload and enhance the city’s ability to detect violations promptly.

Protecting Landlords and Ensuring Tenant Compliance

Another area of concern highlighted by the audit was ensuring that tenants secure proper authorization from landlords or condo corporations before registering units for short-term rentals. The report recommended that Toronto adopt practices from other cities, which require proof of consent to safeguard property owners and ensure adherence to regulations.

Financial Impact and Future Outlook

Since the launch of Toronto’s short-term rental registry in September 2020, the city has collected roughly $20 million in MAT over 42 months, supplemented by registration fees and surcharges on nightly bookings. However, the audit emphasizes that without improved data management and enforcement processes, the integrity of the system remains at risk.

A Call for Modernization: Setting an Example for Other Jurisdictions

As Toronto takes steps to refine its approach to short-term rental management through advanced technology and stricter compliance measures, it offers a blueprint for other cities. Embracing modern solutions is essential in today’s digital age, and transitioning from manual methods to more efficient, technology-driven systems will help maintain regulatory integrity and fairness for all stakeholders.