Airbnb and Landlords in Ontario
With the growing popularity of Airbnb in Ontario, many landlords have made the decision that they would rather use their units as Airbnb rentals rather than trying to find long term tenants. Since traditional tenant agreements are no longer the only money-making option for landlords, short term rentals through Airbnb have become attractive options for landlords for a number of reasons.
However, landlords that currently have tenants and wish to evict so they can switch to an Airbnb model for their property must be aware of the restrictions posed by the Residential Tenancies Act, 2006 (the ‘RTA’). Before making any decisions regarding eviction or turning a rental property into an Airbnb rental, landlords in Ontario should consider some of the key issues below.
Advantages of Airbnb for Landlords
Why would a landlord want to switch their rental property from a traditional rental arrangement to listing their property on the Airbnb marketplace? Often, landlords are enticed by the flexibility that Airbnb offers. Airbnb is a service which allows landlords to rent out their properties on a short-term basis and when it is convenient for them to do so. Landlords can increase their rates during peak time periods such as long weekends or holidays and can remove the listing during periods when they require the property for personal or family use. This is in contrast to a traditional long term tenant agreement where landlords can only increase rent in accordance with the provincial Rent Increase Guideline (currently 1.8%).
Airbnb also allows property owners to avoid long term tenants, which may be a positive for some landlords who have had problematic tenants in the past, or landlords who own property in a high-demand location which would allow for more profit in the short-term marketplace.
Can you simply evict a tenant in order to list on Airbnb?
The short answer to this question is “no”. There are strict requirements for eviction according to the RTA. A landlord can only evict for the reasons provided in the RTA and must provide the tenant or tenants with the prescribed amount of notice. Many landlords misapprehend these requirements and run into trouble – exposing them to fines and potentially orders to pay compensation to tenants who are improperly evicted.
Evicting tenants so that the landlord or the landlord’s family members can move in
One common situation that allows landlords to evict tenants from a unit is so that the landlord or the landlord’s family member(s) may move in. This situation is governed by Section 48 of the RTA which states that the landlord can, after providing proper notice, terminate the tenancy so that the landlord, the landlord’s spouse, child or parent, or a person who will provide care services to the aforementioned, can occupy the unit for at least one year. Only after the one-year period of residential occupation by the landlord or the landlord’s family member(s) can the rental unit be listed on Airbnb.
In order for a proper eviction to occur, the landlord must:
- Provide formal notice to the tenant or tenants;
- Apply to the Landlord and Tenant Board (LTB), for an eviction order;
- Pay compensation to the tenant or tenants in the amount of one month’s rent or another rental unit acceptable to the tenant; and
- The landlord or their family member(s) must actually reside at the rental unit for one full year after the eviction.
Once a landlord serves an eviction notice, the role of the LTB is to schedule a hearing and to review the application. At the hearing, the adjudicator’s role is to determine whether, on a balance of probabilities, the landlord or their family member(s) genuinely intends to reside at the rental unit for the purpose of residential occupation for the period of at least one year.
Although the Ontario Divisional Court has confirmed that landlord’s motives are “largely irrelevant” and that the landlord need only provide evidence that the specified family member has a genuine intention to occupy the rental unit, the LTB does scrutinize these applications very carefully in order to satisfy itself that the specified individual will be moving in and that their period of occupation will be at least one year. In accordance with subsection 72(1) of the RTA, the Landlord must provide evidence that satisfies the good faith requirement. The landlord does not need to establish that its plan is reasonable.
What happens if the Landlord and Tenant Board refuses eviction?
The LTB has the discretion to refuse to evict the tenant if it determines the landlord has not met the above criteria. This means that the tenant or tenants will be permitted to reside at the rental unit and the landlord will not be able to move forward with its plans. Consulting with an experienced landlord and tenant lawyer is crucial to prepare for the application process and the hearings.
In addition, even if the LTB orders an eviction based on the application, it can still order financial penalties or compensation for the evicted tenant if it later determines that the application was made in bad faith. Notice of termination under section 48 is considered to be in bad faith if the landlord evicts the tenant and then:
- advertises the rental unit for rent;
- enters into a tenancy agreement in respect of the rental unit with someone other than the former tenant;
- advertises the rental unit, or the building that contains the rental unit, for sale;
- demolishes the rental unit or the building containing the rental unit; or
- takes any step to convert the rental unit, or the building containing the rental unit, to use for a purpose other than residential premises.
This above list has obvious implications for landlord who are seeking to evict their current tenants with a view to entering the Airbnb market.
Ottawa Landlords and Airbnb If you are a landlord and are looking to evict a tenant in Ottawa, it is wise to consult a lawyer experienced in landlord and tenant disputes first to ensure you are following the proper procedure. If you have further questions about the Residential Tenancies Act or how switching to Airbnb can affect your current property holdings, contact Merovitz Potechin LLP.
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