Tiny Township Ruling Reinforces Municipal Power to Regulate Short Term Rentals in Ontario

Short term rental accommodations have received significant attention from municipalities, the Ontario Land Tribunal, and the Courts since their inception in the late 2000s. The Superior Court’s latest decision in Tiny Township Association v Township of Tiny, 2025 ONSC 1578, provides further judicial consideration of this hot-button issue that engages significant public and governmental debate.

The Applicants, which included the Tiny Township Association of Responsible STR Owners, as well as associated individual short term rental owners, sought to quash the Township of Tiny’s licensing by-laws to restrict short-term property rentals (“STRs”) on the basis that the Township’s licensing by-laws are, in effect, a disguised zoning by law and an illegal attempt to regulate STRs out of existence and ultra vires the Municipal Act, 2001, SO 2001, c 25. The sole issue before the Superior Court was whether the licensing by-laws at issue should be quashed for illegality pursuant to s. 273(1) of the Municipal Act.

While the Township’s zoning by-law continued to permit properties to be rented as STRs, the enacted licensing by-laws were a response to a number of Township studies which sought to:

1.  Increase the availability of affordable housing;
2. Increase municipal revenue through licensing/regulation; and,
3. Decrease community disruption caused by STRs.

The Township’s licensing by-laws imposed certain limitations on:

1. The duration a premises may be used as an STR each year;
2. The number of renters at a premises;
3. The minimum duration of a STR stay; and,
4. Limits on maximum occupancy per bedroom.

The Township’s licensing by-laws also created a demerit points system that could result in fines and revocation of licenses, as well as a cap on the total number of STRs in the Township at 300.

The Applicants asserted that the proposed licensing by-laws was so restrictive that it effectively precludes the viable use of the properties as STRs from a financial perspective, however, the Superior Court, in upholding the validity of the Township’s licensing by-laws, succinctly summarized the Court’s role in such situations by stating:

“The role of the court is not to second guess the policy decisions made by the Township. The role of the court is to determine whether the by-laws are rationally connected to legitimate municipal objectives.”

In analyzing the Township’s licensing by-laws, the Court found that restrictions are inherent to any by-law scheme and are expressly contemplated by the Municipal Act. Further, the “goal of limitation” enacted through the imposition of a cap on the total number of STRs was also found to be rationally connected to the Township’s need to balancing competing policy considerations – of particular importance to the Township in this instance was the retention of an appropriate amount of affordable housing. It was also noted in the Court’s decision that despite the ceiling of 300 licenses imposed by the Township, this ceiling has not yet been met two years after the enactment of the licensing by-laws.

The Applicants also raised issues regarding the Township’s licensing by-laws on the basis that it infringed privacy rights under the Municipal Freedom of Information and Protection of Privacy Act (“MFIPPA”) and freedom of expression rights under section 2(b) of the Charter. The Court dismissed these arguments finding that the public publishing of licensed STR owners’ addresses and contact information did not violate privacy protections based on section 2(2.1) of MFIPPA. The Court also found in their consideration of section 2(b) of the Charter that the restriction on advertising illegal non-licensed STRs imposed by the licensing by-law did not fall outside the range of reasonable solutions to address such an issue.

This decision reaffirms the broad latitude and deference granted to municipalities by the Courts in regulating matters that are within their jurisdiction provided under the Municipal Act such as STRs. In implementing such policies and by-laws to regulate STRs, municipalities have several tools at their disposal to address the social, political, and economic complexities that arise from these uses. So long as such regulation efforts undertaken by municipalities are reasonable and connected to legitimate municipal objectives, both the Ontario Land Tribunal and Courts have routinely shown themselves to be reluctant to wade into critiquing the policy rationale underlying a municipality’s regulation of STRs.