Is it an early sign London's new crackdown on Airbnb isn't working?

The new city bylaw to crack down on Airbnb and other short-term accommodations in London, Ont., came into effect Monday and already, critics say, there are signs it might not be working as smoothly as hoped. 

The bylaw, which was passed in June, was meant to balance the competing interests of homeowners who want to rent out part of their home to make ends meet, while also restricting the rapid growth of short-term rentals operating as "ghost hotels."

The rules require operators to live in the house they are renting, which puts absentee landlords squarely in the cross hairs of the the bylaw. It's an attempt by city law makers to prevent investors from operating multiple short-term rentals in residential neighbourhoods that were never meant to be zoned for businesses. 

When the bylaw came into effect on Monday, city hall officials said only seven out of the estimated 650 short-term rentals operating in the city signed up for the new $175 annual licence, which puts 99 per cent of all short-term rentals in London on the wrong side of the law. 

Enforcement an issue across Canada

"I'm not surprised people haven't signed up. We've seen this in other places," said Thorben Wieditz, director of Fairbnb Canada, a non-profit advocacy group that pushes for fairness in the regulation of short-term rentals. 

We have to make sure enforcement is as rigorous as it can be.- Thorben Wieditz, director of Fairbnb Canada

He said while more people will likely sign up in the coming weeks, there have been problems with getting the majority of short-term landlords on board in most Canadian cities that have passed similar bylaws. 

"I think it's up to the municipalities to do the enforcement, follow up with the fines, and actually make sure that people are registered and only rent out, as in the case of London, their own principal residence."

"This is an issue in municipalities across the country. A lot of municipalities do not have the resources."

Landlords aren't keen on the new rules

From the outset, London's short-term rental bylaw faced opposition from landlords, when dozens of them packed a committee room at city hall to give law makers an earful this spring. Most of them took issue with the requirement that, in order to qualify for a city licence, they must live in the house they're renting. 

It might explain why so many of them are reticent to sign up now that the bylaw is in force, but if authorities don't follow up on enforcement Wieditz said, London could end up like Quebec.

There, authorities didn't issue a single fine within the first year of the program, which has led to many operators acting as if there is no licensing scheme at all.

In Montreal in particular, its estimated 95 per cent of the city's short-term rentals are illegal.

For London, Wieditz said, how strictly the licensing scheme is enforced will the single biggest factor in determining whether the licences succeed. 

"We have to make sure enforcement is as rigorous as it can be, in order to make sure those regulations and bylaws are effective."

Fines start at $500

Wade Jefferies, a manager with London's bylaw enforcement department, told CBC News via email Wednesday that "education and warning notices always come first," but bylaw officers won't hesitate to issue fines when the situation warrants it. 

"There is no grace period, but investigating complaints and putting property owners on notice takes time," he wrote.

"The penalties to operate without a current, valid short-term accommodation licence, or short-term accommodation broker licence start at $500 and could double, failure to company could also include a summons to appear in court."

It might not be a big enough penalty to put a chill on the resistance to the new licensing scheme, especially when Airbnb says the average host in Canada earned $9,600 last year. 

Wieditz said Airbnb and other online rental operations can also do their part, by telling its hosts about the changes to the bylaw and encouraging them to sign up for licences in order to encourage compliance. 

"This is literally an easy step for these platforms."