London closes door to out-of-town and multi-unit Airbnb hosts

A seismic shift is coming to the local short-term rental market.

On Tuesday, city council approved a new business license for short-term accommodations (STAs) advertised on websites like Airbnb and Vrbo.

A license would require inspections and charging the four per cent municipal accommodation tax (hotel tax).

But the most contentious requirement, that hosts can only rent space on their own primary property, received significant pushback from hosts.

By closing the door on out-of-town hosts and multi-unit hosts, city staff suggested it would help address the housing crisis and reduce neighbourhood nuisances like noise.

Coun. Shawn Lewis said online STAs have evolved from being part of the sharing economy to become small businesses, “They’ve taken advantage of an opportunity in a regulatory void.”

“It’s not about renting out space in your home while you’re away anymore,” added Lewis. “It’s become buying up houses, taking them off the market.”

According to a previous staff report, a survey of online platforms in the spring found 650 properties advertised in London, about 440 did not appear to be occupied by the host.

However, Counc. Stephen Turner argued STA hosts are small business operators with hundreds of thousands of dollars invested.

“What we are going to do now, is take a class of legal operators and turn them into illegal operators,” warned Turner. “That should be concerning to us.”

“We are not,” shot back Coun. Shawn Lewis. “We are actually exercising our appropriate authority, as council, to license and regulate a business operation.”

Several councillors wanted to have the new business licensing in place before homecoming weekend at Western University in September, but city staff warned that wouldn’t give city hall enough time to amend the hotel tax policy.

Council voted 12-2 in favour of the short-term accommodation licenses including the restriction to their primary residence.

The new licensing will go into effect October 1.

“I don’t relish doing it, but I do know we have a housing crisis in London,” explained Coun. Maureen Cassidy.

Coun. Mariam Hamou suggests hosts can still be landlords with multiple properties by finding long-term tenants.

“Usually Airbnb and short-term rentals don’t make much more than long-term rentals, so I think it’s a good idea that people look at other options,” Hamou said.

A group of local hosts have already established a legal fund but have not indicated their next step.