London considers requiring business licenses for short-term rentals on Airbnb and similar sites

It could soon get more complicated for Londoners to offer rooms and homes for rent on websites like Airbnb and Vrbo.

In a new presentation to city hall’s Housing Advisory Committee, civic administration proposes creating a new business license category for short-term accommodation (STA).

Councillor Shawn Lewis pressed for new rules to govern short-term rentals in 2019.

Lewis is concerned that some property investors buy up homes and condos, then keep them empty except when rented short-term.

The potentially lucrative practice, he says, removes stock from the housing and rental markets, driving up prices.

Some locations also become a nuisance for neighbours.

“The ones used for investment income as rentals, they are the problem properties in the neighbourhood,” Lewis explains. “They get rented and become the weekend party house.”

The presentation prepared by city staff admits that the number of primarily vacant home/condos/apartments in London offered for short-term stays is unknown.

However, a recent review of related websites discovered approximately 600 advertisements in London, 69 per cent (about 400) offering the entire house or apartment.

“They’re only used on weekends, and those are places that could be used as long-term rentals in a market where we have a housing crisis,” says Lewis.

City staff suggest the solution may be to create different licensing requirements for different types of property owners.

Owner-occupied or tenant-occupied locations would require the new STA business license after meeting conditions that may include a fee, building inspection and fire inspection.

Whereas hosts offering short-term rentals of a location that isn’t their primary residence, would need to qualify for the more comprehensive rental license required by landlords who lease to long-term tenants.

“It’s like an investment property, but in our own home,” says Rob Hodson.

Hodson and his wife constructed their new home with two entrances so they can supplement their income with short-term rentals offered through Airbnb.

While he doesn’t judge those who purchase second homes for short-term rental, he didn’t want to contribute to the housing crisis.

“I understand how they are taking away from residential living for people in the downtown areas,” says Hodson.

Lewis would also like to level the playing field for hotels that currently must charge a municipal room tax of four per cent, per night.

“[I want it] to include the Municipal Accommodation Tax,” he says of any future council decision. “It comes down to fairness. If they [STAs] operate like a hotel they should pay the hotel tax.”

Hodson says it’s a reasonable expectation, but wants to ensure the focus remains on the housing crisis.

“I am totally okay with that, so long as the city mandates some of that tax goes to affordable housing.”

The Housing Advisory Committee will receive the presentation about the licensing proposal at a meeting next week.

A public meeting will be held by council’s Community and Protective Services Committee to collect feedback in the coming months.