What Should London Do About Short-Term Rentals and Airbnb?

Short-term rentals have become a highly debated topic in Canadian housing markets. Cities from Toronto to Vancouver have grappled with how to regulate platforms like Airbnb and VRBO. Now, London, Ontario, is once again reviewing its short-term accommodation rules as city council considers updates to the current bylaw. So, What Should London Do About Short-Term Rentals and Airbnb?

For homeowners, investors, neighbours, and prospective buyers alike, the question is becoming increasingly pertinent: what role should short-term rentals have in London’s housing market?

The answer is not straightforward.

Short-term rentals offer valuable income for homeowners and flexibility for travellers, but they can also cause neighbourhood disruption and potentially reduce long-term rental housing.

As London examines its short-term accommodation policies, understanding both perspectives on the issue is crucial.

Why Short-Term Rentals Are Attractive to Property Owners

Platforms like Airbnb have fundamentally transformed how some homeowners and investors consider property use. For many property owners, short-term rentals can earn considerably more income than traditional long-term leases.

In neighbourhoods near Western University, Fanshawe College, downtown London, or major hospitals, demand from visitors, families, travelling professionals, and event attendees can be high throughout the year.

There are multiple reasons property owners are attracted to the short-term rental model.

Higher Potential Revenue

In certain markets, nightly rentals may generate more income than a standard twelve-month lease, especially during busy travel seasons or significant local events.

Flexibility for Homeowners

Some homeowners opt to rent out basement apartments, garden suites, or spare rooms instead of committing to a long-term tenant. This allows them to retain personal use of the space while earning extra income.

Supporting Tourism and Visiting Families

Short-term rentals also cater to visitors who might prefer a residential environment over a hotel room. Often, guests are visiting family in the city, participating in university events, or travelling to London for medical reasons.

According to a recent CBC News report, a London homeowner who runs an Airbnb in Old South said most of his guests are visiting family in the neighbourhood rather than hosting large gatherings or parties.

The Concerns About Short-Term Rentals

While short-term rentals can offer benefits, they have also raised significant concerns in many cities. The main issue is that housing is a finite resource, and when homes are used mainly for short-term stays rather than as long-term residences, it can impact availability and affordability.

Common concerns raised by municipalities include:

Loss of Long-Term Housing Supply

Critics argue that investor-owned Airbnb properties can take homes out of the long-term rental market, especially when owners manage multiple units.

Neighbourhood Disruptions

Some communities have faced problems with “party houses,” where properties are rented out for large gatherings or events that lead to noise complaints and safety issues.

Enforcement Challenges

Municipalities often find it challenging to monitor and enforce licensing requirements when properties can be listed across multiple online platforms with ease.

These concerns partly explain why many Canadian cities have implemented licensing systems, occupancy limits, and restrictions on investor-owned short-term rentals.

What London’s Current Short-Term Rental Rules Look Like

London implemented licensing rules for short-term rentals in 2022, intended to enable homeowners to rent out parts of their homes while stopping large-scale commercial businesses.

Under the existing framework, short-term rentals typically need to satisfy several criteria:

1. The operator must reside on the property
2. The property must be licensed by the city
3. There are restrictions on the number of bedrooms that can be rented
4. Operators must pay annual licensing fees and accommodation taxes

The goal was to permit owner-occupied short-term rentals while discouraging absentee investors from operating multiple properties.

However, city staff now say the current system has gaps.

Why London Is Considering Changes to the Bylaw

A recent city staff report presented to London’s Community and Protective Services Committee highlighted enforcement challenges and areas where the existing bylaw may not be functioning as intended.

According to CBC News, the report found that some operators have been running multiple short-term rentals across different properties despite rules requiring the operator to live on site.

City staff also identified issues with occupancy limits.

The current bylaw restricts the number of bedrooms that can be rented but does not explicitly limit the number of guests, which has led to some properties being used for large gatherings.

As reported by CBC News, some of these rentals have caused what city staff call “recurring enforcement challenges,” including party houses that lead to neighbourhood complaints.
(Source: CBC News, March 11, 2026)

Proposed Changes the City Is Considering

The proposed amendments being discussed by the council include several significant updates.

Higher Fines for Unlicensed Rentals

City staff propose increased penalties for unlicensed short-term rentals. Current fines start at $500, but the proposed changes would raise that to $1,500 for operators and $10,000 for companies listing unlicensed properties, according to the CBC report.

New Inspection Fees

The city is also proposing a one-time inspection fee of approximately $351 for licensed properties, on top of the existing annual licence fee of $196.

Occupancy Limits

One of the more debated proposals would limit short-term rentals to two occupants per bedroom, a rule intended to address overcrowded party-style rentals.

However, some operators argue that this rule could unintentionally impact legitimate rentals. In the CBC article, a London homeowner said such a limit might make it difficult for families with children to book larger open-concept units that currently accommodate multiple guests.

Closing Loopholes for Absentee Owners

Another focus of the proposed changes is to prevent investors from running multiple short-term rentals while claiming compliance with owner-occupancy rules. City staff believe this has been one of the main gaps in the current bylaw.

The Larger Housing Debate

The discussion about short-term rentals in London is part of a broader conversation across Canada.

Municipalities are increasingly trying to balance several competing priorities: Protecting neighbourhood stability, preserving long-term housing supply, supporting tourism and flexible accommodation options, and allowing homeowners to generate additional income

Cities such as Toronto and Vancouver have implemented stricter regulations in recent years, often limiting short-term rentals to primary residences only.

London’s approach has traditionally sought a middle ground. But as housing supply pressures persist and enforcement challenges arise, policymakers are once again reevaluating where that balance should be.

What This Means for Buyers, Sellers, and Investors

For property owners and investors, regulatory uncertainty plays a key role when assessing the potential of short-term rental properties. Changes to licensing requirements, fines, or occupancy limits can greatly impact the viability of these investments.

At the same time, stricter regulations could potentially bring some properties back to the long-term rental market, which might affect housing availability in the city.

For homeowners who operate responsible, owner-occupied rentals, the challenge is ensuring that new rules address bad actors without unintentionally restricting legitimate operators.

The Question London Needs to Answer

The main issue facing London’s city council is not whether short-term rentals should exist. They already do and serve a clear purpose for travellers, families, and homeowners.

The real question is how they should be regulated to balance neighbourhood stability, housing supply, and economic opportunity. Should short-term rentals be limited to primary residences? Should investor-owned Airbnb properties be banned altogether? Or should the city mainly focus on enforcement against nuisance properties and unlicensed operators?

As the council discusses possible updates to the short-term accommodation bylaw, London residents might have different opinions on where to set the right balance.

But one thing is certain: how the city chooses to regulate short-term rentals will shape London’s housing landscape for years to come.

Source:
CBC News — “Airbnb owner urges caution as city moves to fix short-term rental bylaw” (March 11, 2026)
https://www.cbc.ca/news/canada/london/city-short-term-accommodation-licences-9.7122382

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