For Tianning Ning and her family, Airbnb was supposed to be a way to live in Toronto after facing the brutal reality of the city’s rental market. 

The family — originally from Switzerland — was looking for a place to live for 10 months to accommodate Ning’s husband’s sabbatical at York University. 

The problem? They could not break into the market due to a lack of Canadian credit history. 

Across Canada, renters desperate to find a place to live are presented with a slim inventory of options mostly out of their price range. 

At the same time, there are thousands of houses, apartments, cottages and condos — alternately advertised as cosy or spacious, rustic or modern, central or secluded — up for grabs.

But the properties are advertised as short-term Rentals, not intended for permanent Housing.

In Toronto, Ning and her family booked a home in the city’s Deer Park neighbourhood last August and found it perfect as it allowed their children to go to a reputable school nearby, while Ning and her husband could work.

The arrangement with the Airbnb host was that the family would stay in the home for 311 days for approximately $5,150 per month, plus taxes and Airbnb’s service fees. 

But what started as a dream eventually became a nightmare when the host told the family in January that they would need to leave by the end of the month. 

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“We were totally shocked,” said Ning in an August interview with CBC News. 

The family’s situation has brought into sharp focus how entities like Airbnb shape Canada’s housing market and the grey zone that exists because of a lack of targeted regulations.

The rentals, such as those booked through Airbnb or Vrbo, are becoming increasingly prevalent in local housing markets, creating new opportunities for tourists and an additional revenue stream for some homeowners.

But the growth has also renewed concerns about the financialization of housing, a trend that leaves people like renters in the lurch while entities like investors, property developers and landlords profit from the situation.

What’s the impact of short-term rentals on the Canadian economy?

Short-term rentals, or STRs as they’re known, are increasing revenue for the Canadian economy. But the growth has renewed concern from experts surrounding the financialization of housing. 

According to a Statistics Canada study released in June, the rentals — commonly booked through online platforms — have accounted for a growing share of revenue of the Canadian accommodation services subsector, including hotels and motels providing short-term lodging for travellers, vacationers and others. 

In 2021, STRs accounted for over 15 per cent of revenues in the subsector, compared to seven per cent in 2017.

Financialization is defined by the Office of the United Nations High Commissioner for Human Rights as a phenomenon that occurs “when housing is treated as a commodity — a vehicle for wealth and investment — rather than a social good.” 

However, a lack of data means it’s not easy to determine the impact of STRs on specific rental markets. 

What is the impact on rentals?

In 2018, private STRs generated an estimated $2.8 billion, according to Statistics Canada in a 2019 report.

Airbnb had its start in 2007 when two of its co-founders, roommates Joe Gebbia and Brian Chesky, were struggling to pay their rent in San Francisco and decided to offer short-term accommodations. Along with Nathan Blecharczyk, the company was founded in 2008.

Ten years later, the business had clearly boomed. According to a nationwide study of Airbnb trends in 2018 done by McGill University researchers, “31,000 entire homes were rented frequently enough … that they are unlikely to house a permanent resident.”

The study, released in 2019 by experts David Wachsmuth, Jennifer Combs and Danielle Kerrigan, also noted that most of the Airbnb listings were concentrated in Montreal, Toronto and Vancouver, some of Canada’s most expensive rental markets that year.

And unlike the company’s humble home-sharing beginnings, the study also found that almost half of Airbnb’s revenue from 2018 “was generated by commercial operators who manage multiple listings.” 

But Airbnb said that the vast majority of Canadian hosts share just one home and entire home listings represent less than one per cent of the country’s overall housing supply. 

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What don’t we know?

A key piece of missing information is the percentage of total housing stock used for short-term rentals, according to David Dale-Johnson, the Stan Melton executive professor in real estate at the University of Alberta.

“Given increasing immigration and the shortage of housing that we anticipate going forward, it’s extremely important for local governments to know what’s happening to their housing stock,” Dale-Johnson said.

WATCH | Airbnb hosts vs. renters: a tough conversation about the housing crisis

Canada is also experiencing a loss in affordable housing units, according to 2020 research from Steve Pomeroy, a senior research fellow at Carleton University in Ottawa.

Between 2011 and 2016, the market lost 322,600 private rental units with monthly rents below $750 — considered affordable to households earning less than $30,000 annually. The trend continued through 2021 when another 230,000 low-rent units were lost. 

This represents a decline in unsubsidized rental housing of six per cent over 10 years, he said.

“The emergence of short-term rental companies such as Airbnb has enabled both small investors and some large corporations to generate much higher revenues than those generated through long-term tenancies,” Pomeroy said in his report. 

The federal government’s national housing strategy provides communities with over $82 billion in funding for projects such as building new subsidized housing or modernizing existing units.

But several housing researchers say Canada’s plan still places too much emphasis on building condominiums and home ownership — which, at current prices, are out of many people’s reach.

These factors have played a part in increasing the number of renters to five million Canadian households, which is about one-third of the total households in Canada, according to census data from 2021. 

What about smaller markets?

Research in recent years has looked at how short-term rentals put pressure on larger housing markets in Ontario, B.C., and Quebec, as well as in major tourist hubs like Canmore, Alta and P.E.I.

Laura Murphy is working to shed light on how STRs and the financialization of housing affects tenants in smaller cities like Edmonton.

“The impact of short-term rentals more broadly … is that this often raises rents for tenants who are living there,” said Murphy, research co-ordinator with the Affordable Housing Solutions Lab at the U of A.

Trends she noted include upward pressure on prices for rental housing, the impact of gentrification and an increasing reliance on tourism, as STRs are often positioned near walkable green spaces, shopping and entertainment districts and transit. 

The City of Edmonton does not track the impact of STRs on housing affordability but has determined that one in four renter households — about 33,270 households — spend more than 30 per cent of household income on housing costs and may live in crowded or unsafe conditions and cannot afford to move.

Murphy said some tenants may be displaced because their landlords can convert long-term rentals to offer short-term accommodations for higher profit margins. 

“We’re at the cusp of a tipping point with what’s happening here,” Murphy said. 

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This outcome is significant with every home making a difference as the country’s rental vacancy rate has hit a near-historic low for purpose-built rentals, according to the Canada Mortgage and Housing Corporation (CMHC) annual rental market report released in January.

The national housing agency found the vacancy rate fell to 1.9 per cent in 2022 from 3.1 per cent in 2021. Some reasons the agency cited for the drop are higher immigration, more expensive home ownership and students returning to on-campus learning in major urban areas.

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Why do people become hosts?

Between 2010 and 2022, Airbnb hosts around the world earned $150 billion US, including $7.1 billion for its Canadian hosts, according to the company. 

“Nearly 50 per cent of our hosts have told us that they host in order to stay in their home,” Nathan Rotman, Airbnb’s regional lead for the U.S. Northeast and Canada, said in an interview with CBC News. 

“We’re finding this more and more these days that [as] the cost of living challenges rise,” Rotman said. “Mortgages are rising, and [people are] struggling … They’re looking for different ways to earn some additional income.” 

In 2022, an average host in Canada earned $12,000 on the platform. 

The company has also collected and remitted over $177 million in tourism taxes in 2022 in Canada — including nearly $70 million in federal taxes.

Earlier this summer, Airbnb released its Canadian Travel Dispersal Report, which examined how it helps fill the gaps in providing accommodations to travellers. 

Nearly half of Canada is home to Airbnb listings but no hotels, the report found. Some are smaller communities like Pinware, N.L., Eatonia, Sask., and Neepawa, Man. 

“We’re seeing these trends of more distributed travel persist, to the benefit of smaller cities, small towns and off-the-beaten-path urban neighbourhoods across Canada,” according to the report. 

What about regulations?

While Airbnb boasts about contributing to local economies, cities across the country are grappling with how to deal with some of the consequences of the company’s massive growth. 

The Alberta Hotel and Lodging Association has called on the provincial and municipal governments to introduce further regulations on short-term rentals to mitigate impacts on its industry. 

“Hotels are not opposed to genuine home-sharing, where residents generate extra money by renting their principal residence,” Tracy Douglas-Blowers, association president and CEO, said in a statement to CBC News. 

“But buying houses and condos and renting them out on a nightly basis is not home-sharing — it is a big business.” 

Cities across Canada have had varying levels of success in efforts to regulate a boom in STRs.

Most major cities have generally outlined STRs as being accommodations for under a month. 

Other measures include implementing a vacant home tax, requiring operators to register, listing properties as principal residences, acquiring a business licence and abiding by zoning bylaws.

Quebec passed provincial legislation in June that will force Airbnb and other short-term rental platforms to crack down on unauthorized listings or face hefty fines. Many of the new provisions will come into force in September.

The action was taken following a March fire inside an Old Montreal heritage building that killed seven people. Several of them were staying in illegal Airbnbs.

Ensuring the legality of Airbnb listings has been a challenge, despite the risk of fines of up to $100,000 per illegal listing. Some hosts in Quebec circumvent the law by using false registration numbers.

Edmonton has required STR operators to be licensed since August 2019. 

As of mid-July, there were 973 licensed STRs in the city, according to information provided by city communications adviser Karen Burgess. 

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The latest estimate for STRs in the city is 2,146 in 2019, according to the city. At the time, there were 16 business licences. 

While illegal STRs are an issue in other major cities, the City of Edmonton does not track the number of unlicensed rentals. The city estimates only 45 per cent of rentals have a valid business licence.

Concern has also been raised about STRs’ impact on neighbourhoods through social disorder, as was the case in a 2020 legal decision involving an Edmonton condo board. 

A Court of King’s Bench ruling resulted in a permanent injunction in support of the board of directors for The Ten Lofts Condominium and its legal right to ban rentals through companies such as Airbnb, Expedia, Kayak and HomeAway.

“The short-term rental of units, in the absence of a lease, not only contravenes the bylaws of the corporation but would result in a fundamental change to the structure and character of the condominium, without the consent of the board and without the consent of the vast majority of unit owners,” Justice Paul Belzil said.

To collaborate with cities on regulation, Airbnb launched the City Portal, which provides governments with tools and insights on listings in their community. The platform said it has 300 partners globally, including Toronto and Vancouver.

How does the housing crisis fit in? 

According to the CMHC, 3.5 million more homes must be built by 2030 to address housing affordability.

“It really is a story of supply not being enough in those markets,” CMHC housing economist Michael Mak told CBC News. 

Markets like Edmonton are better poised to meet demand because of the more significant availability of purpose-built rentals and smoother construction processes, according to Mak. 

Mak noted that labour shortages in a rising interest rate environment have made it more difficult for developers to approach projects. 

He said STRs can impact housing markets with low vacancy rates, but they are not the main factor.

Airbnb also pointed to the housing supply issue and noted fewer than 3,000 actively-booked long-term stay-only listings of 28 days or more in Toronto, between April 2022-23.

The platform has said it denies the claim by some advocates that it is facilitating a “shadow-market” for medium and long-term housing. 

But for the U of A’s Laura Murphy, the issue of effectively regulating STRs goes beyond housing stock. 

“The vast majority of new builds are completely out of reach for a lot of households who are in need of housing,” she said. 

What’s the way forward?

A recent report by the Ottawa-based think-tank Canadian Centre for Policy Alternatives found that minimum-wage workers can afford one-bedroom rentals in only three out of the 37 census metropolitan areas. 

“It’s not about whether this is good or bad or vilifying these different models, but it is about regulating these things so that tenants aren’t shouldered with these huge forces that are very difficult to manage,” Murphy said. 

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Regulations can include a formal, publicly accessible registry for licensed STRs. Municipal governments also need to ensure that new real estate developments are intended for local and long-term tenancies, rather than being scooped by investors, Murphy said.

Alternative hosting groups like Fairbnb.coop say they are facilitating “community-powered tourism” by having 50 per cent of the platform’s fees go toward funding local projects. 

The platform says it is “not an extractive corporation that diverts resources from local communities to tax havens.” The platform also notes that, where necessary, it excludes large real estate investors who exclusively rent to tourists.

The federal government also has a role to play with a growing push to create a beneficial ownership registry allowing regulators to track which entities own key companies and assets.

However, work is ongoing to incorporate real estate investments into the scope of a registry. 

“There’s really no clear way to understand, of the short-term rentals, who they are owned by,” Murphy said. 

“We need better information, and we really need to start that work, so we can kind of show where some of these gaps exist.”

Who is vulnerable? 

At the beginning of June in Toronto, Ning and her family had their belongings removed from the Airbnb’s premises. 

The matter was taken to the Ontario Landlord and Tenant Board (LTB), which upheld the family’s removal and concluded on June 15, they were not protected under the province’s Residential Tenancies Act. 

In a past interview with Radio-Canada, the Airbnb host said she needed to move back into the home to deal with a family emergency. 

Airbnb informed CBC News that the platform offered re-booking options and a coupon to cover a month’s stay. Ning said they declined the support citing it was inadequate.

The family has since relocated to Montreal, where Ning said they are assessing their future, after an attempt to appeal the decision was denied.

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“There must be some form of justice,” she said. “[There] must be some recognition that we have some sort of rights.” 

The LTB’s decision raised questions about the ambiguity of who is considered a tenant, how they are protected and what kind of responsibilities hosts and landlords are required to adhere to.

Ning said she wants to return to Toronto as she undergoes the immigration process while working in Quebec. 

But she said Canada’s housing crisis has left her shaken and calling for tighter regulations to protect tenants and prevent STRs like Airbnbs from being used as long-term rentals.

“It’s kind of [an] eye-opening … opportunity to really live the housing situation as a newcomer … but quite stressful.”