New powers for councils to cap short-term accommodation as Victoria moves to 7.5% ‘Airbnb tax’
The Victorian government will grant local councils new powers to limit short-stay accommodation as it moves to introduce a 7.5% levy on properties listed on platforms like Airbnb and Stayz.
The Allan government will on Tuesday introduce legislation for its nation-first levy – which some have dubbed the “Airbnb tax” – that will begin on 1 January 2025. Properties that are the owner’s primary residence will be exempt from the short-stay levy, as well as hotels, motels and caravan parks.
The government will also grant local councils and owners’ corporations powers to ban or limit short-stay accommodation.
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The treasurer, Tim Pallas, said the reform would help in “getting the balance right” in Victoria’s mix of housing.
“It is important we recognise and give a signal to the market that our priority is to get people into homes and long-term, secure rental accommodation is important,” he said.
But Pallas could not say how many of Victoria’s short-stay properties – which number at almost 50,000 – would transition to permanent rentals.
The legislation will apply a 7.5% levy on revenue for short-stay accommodation booked on platforms like Airbnb and Stayz. It will apply to stays of less than 28 days, but will not apply for bookings made before 1 January.
The Melbourne city council last year voted in-principle for new regulations on short-stay rental accommodation, including a days-per-year cap and an annual registration fee by February. But the reform was paused after the Victorian government revealed its plans to implement a state-wide levy on short-term accommodation in its housing statement.
At the time, the government said it was expected to raise about $70m a year, with the additional revenue to fund social and affordable housing.
But Pallas on Tuesday said the carve-out for owner-occupied properties meant the revenue figure had been revised to about $60m a year.
The government has committed to 25% of the funds being invested in regional Victoria.
A Victorian government spokesperson said the bill did not provide councils with the power to ban short stay accommodation and changes to their planning schemes would require approval from the planning minister.
The Greens secured the additional council and owners’ corporations reforms as part of negotiations with the government over the legislation.
In a letter to the Greens leader, Ellen Sandell, viewed by Guardian Australian, Pallas said the levy would mean owners’ corporations would be able to prohibit short-stay accommodation within its strata scheme, and from early 2025 local governments could regulate short stays.
The regulations could include requiring a permit or limiting the number of nights a property can be rented as a short stay.
Airbnb last year urged the Victorian government to exclude private room bookings and other “budget accommodation” from its levy and cautioned other states from immediately following suit. Airbnb previously pushed for a 3-5% tax on all accommodation providers.
Michael Crosby, head of public policy at Airbnb Australia and New Zealand, said the government had contradicted its “clear pledge to create one simple framework for the short-stay accommodation sector”.
“Airbnb has long advocated for a small levy, paid for by the guest at the time of booking, that goes into affordable housing. We need to build more houses and this is a way to raise much-needed funds to do that.
“However 7.5% is too high and will jeopardise the ability for Victoria to attract tourists to areas lacking traditional accommodation, and penalise families looking to travel as cost-of-living pressures continue to bite.”
Crosby said Airbnb supported a statewide framework and not a council-by-council approach.
“This will undermine the economic benefits that flow from short-term rentals, with Airbnb contributing billions to the Victorian economy and helping support tens of thousands of jobs,” he said.
Eacham Curry, senior director for government and corporate affairs at Stayz, said the government’s announcement was a departure from what it previously proposed, citing the exemption for primary places of residence and stronger powers for councils and owners’ corporations.
“These changes will undermine the original purpose of the levy; to raise money for social housing initiatives, and risks creating bureaucratic complexity that will drive away tourism dollars,” Curry said.
“Stayz has always advocated for the STRA [short-term rental accommodation] sector to make a contribution that recognises the impact that it has on the provision of services by state and local governments. Any levy should be set at a sensible level and applied to all short-term accommodation providers.
Curry said short-term rental accommodation was “not the cause or the solution to the current pressures on housing”.
“We would encourage government to avoid additional or increased day or night caps, limits on guest numbers, or day fees. None of these approaches address current concerns around housing and could risk the value STRA brings to local communities and their economies.”
