New Airbnb Laws In Toronto Case Analysis

New Airbnb Laws in Toronto

The world is changing and laws need to progress at the same rate as technological advancements. With the Internet being a fundamental way that we live, the issues around emerging innovative online platforms raises concerns about the implications of a web-based sharing economy. Amongst the prominent leaders in the resources sharing economy is Airbnb. Founded in 2008, Airbnb is a transnational, multi-billion dollar company that reshaped the housing sector. Through revolutionizing the market, Airbnb has fostered a readily accessible supply of low-cost accommodations and became parallel to established hotels in the hospitality and lodging industry. The unprecedented social business model of Airbnb has allowed innovative

By June of 2018, the City of Toronto (the City) will enact a new set of zoning by-laws that will regulate the operations of short-term rental properties and use of online platforms such as Airbnb. Through the analysis of Airbnb’s self-regulating capabilities, ex-ante approach, ex-post principles, short-term rental regulations in Toronto will prove to be sufficient in balancing economic gains and disadvantages. In the highly competitive hotel industry, the decentralized structure of internet based home sharing platforms has significantly lowered the barrier to entry. As a result, there are varying ideas on where the line between consumer choice and consumer protection should be. Many of the laws regulators have previously attempted to apply existing regulations to Airbnb, but online resource-sharing services often fall in the “gray area” of law. However, with nearly a decade of business around the world, Airbnb has established a self-regulating capability on the platform to ensure the utmost efficiency. For over a decade, the regulatory responsibility was retained by Airbnb rather than the government. This was in part, there was a “lag period” which was dependent on the public opinion and attention on the subject. With a system built on peer trust, the Airbnb website connects members through photo identification,

Although Airbnb has warned the City about the implications of imposing too many “red tapes”, specifically when it came to legal penalties on operators, enforcement is necessary to deter hosts from breaching the provisions outlined in the Toronto by-law. In part, an ex post control will send a message to potential noncompliant hosts and deter offenses to occur. To allow for greater flexibility and avoid blanket fines, penalties are up to the discretion of the City Council and determined by the economic gain of the party found to have breached the by-law as stated in a City document (LS23.1). Moreover, the City can remove all short-term rental advertisements on physical and online platforms that are not registered within 24 hours of notification from the City. Business licenses may also be revoked and operators may be suspended from renewing their business permit. Although the onus is on the operators and not on the online platform such as Airbnb to comply to the regulations, registered short-term rental operations will be required to be on a public registry which ensures that those who enlist illegal Airbnb properties can be easily identified and contacted. However, Airbnb will have a part in enforcing the City’s