A Toronto city official says a new smartphone app that connects drivers with private parking spaces is providing a service that is illegal, but the mayor says the bylaws may need to change.

The app Rover allows users to search a map for driveway or garage spaces posted by homeowners. A driver can book a space and pay electronically. Rover then takes a cut and then remits the rest to the homeowner. Rates are capped at $2 per hour.

The app has been downloaded nearly 2,000 times and almost 50 spaces are now listed in Toronto, where it is being tested before rolling out to other cities, according to co-founder Grant Brigden.

Toronto bylaw official Klaus Lehmann said Wednesday that the app is “not legal” and that homeowners who it could face a fine of up to $5,000 if the city decides they are illegally operating as a commercial parking lot.

Brigden told CTV News Channel that he believes renting out a single space is perfectly legal. “The technology is new and so therefore there is some confusion,” he said.

“We’re not trying to create parking lots in people’s driveways or front lawns,” Brigden added.

Brigden said that the city ought to accept the company’s presence, in part because it helps reduce congestion.

Toronto Mayor John Tory told reporters he first heard of the app on Wednesday.

Tory said city bureaucrats may be correct that the app leads people to illegal behaviour, in which case city regulations will need to “catch up.”

“Uber is operating outside of the law too,” he said, referring to the ride-sharing app that connects smartphone users with nearby private drivers.

“That doesn’t mean the solution is to stamp out the technology,” Tory added. “What you have to say is, ‘are our regulations consistent with the world as it is in 2015?’”

The City of Toronto unsuccessfully sought a court injunction to shut down Uber and recently voted 35-2 in favour of urging a police crackdown. Tory voted against that motion.

Airbnb, which allows people to rent out rooms or entire homes via its website and smartphone application, has also caught the attention of many municipal and provincial governments.

Quebec, for example, recently said it plans to require Airbnb users to pay taxes and be subject to the same regulations as registered hoteliers.

With files from The Canadian Press and a report from John Vennavally-Rao