Citing concerns about the city's "desperate" rental market, Coun. Ana Bailao successfully moved a motion blocking lawful secondary suites from being listed on short-term rental platforms like Airbnb.
Bailao says those suites, often basement apartments, are a key form of affordable housing in a city where the vacancy rate has dropped below two per cent, the lowest it's been in a decade, according to a city staff report.
"We need to ensure that whatever could be somebody's primary residence is maintained as that," Bailao told the planning and growth committee.
"We have an extremely unhealthy vacancy rate in this city."
Vancouver, which just voted on its own short-term rental rules, also bans the listing of secondary suites.
However, city staff confirmed the rules wouldn't block someone from offering up a finished basement apartment without the secondary suite designation. They note there are just over 1,750 lawful secondary suites, but tens of thousands of basement apartments across the city.
Airbnb, by far the largest player in the short-term rental sector, says about 730 of its 10,000 listings in the city are secondary suites.
Alex Dagg, Airbnb Canada's public policy manager, says she's disappointed with the city's move.
"We think that's short-sighted and harmful for families in Toronto," she said.
Councillors on the planning and growth committee did vote Wednesday to forge ahead with the rest of the zoning plans first unveiled last week. Those regulations restrict Torontonians to renting out only their primary residences, while defining short-term rentals as 28 days or less.
If council approves the move, hosts will be able to rent out three rooms inside a house, or the entire residence.
If they choose to rent out the entire residence, they can only do so 180 days out of the year, something several Airbnb hosts attending the meeting oppose.
Currently, there are no municipal regulations governing short-term rentals. The city is moving to put regulations in place in part because of concerns about rental availability.
A separate city committee is set to debate enforcement on Thursday, and it is likely the rules will be tweaked before going to the full city council for approval.