In an Australian-first, Victoria will begin taxing short-stay accommodation platforms like Airbnb and Stayz with a 7.5% levy from 2025 as part of a suite of housing reforms announced by the state government.
Premier Daniel Andrews made the announcement as part of Victoria's housing statement, a policy document aimed at tackling the root of the housing problem - supply.
"In Victoria, there are more than 36,000 short stay accommodation places – with almost half of these in regional Victoria. More than 29,000 of those places are entire homes," the document states.
"These are places that cannot be used for longer-term accommodation or rented out on fixed term agreements – so it makes sense that they should provide some benefit toward the places that can."
The 7.5% levy will apply to short-stay accommodation platforms' revenue from January 1 2025.
"The revenue raised from the levy will go to Homes Victoria, supporting their work building and maintaining social and affordable housing across the state, with 25 per cent of funds to be invested in regional Victoria. This also means other local council charges on short stay accommodation will be removed," the document states.
The state-wide short-stay levy is the first of its kind in Australia, but other states could follow suit.
Last week, Brisbane Greens mayoral candidate Jonathan Sriranganathan proposed a 1,000% council rates surcharge on investment properties that are rented out as short-term accommodation as part of his election commitment.
If successful, the Greens would increase the higher rates from 150% of the standard rates to 1,000% - an extra $10k. This would mean that if an inner-city apartment would normally attract a council rates bill of $1,800 per year, if it is listed on Airbnb or Stayz for more than 45 days, that rates bill would increase to $18,000.
Airbnb says 7.5% levy is "too high"
Country Manager of Airbnb in Australia and New Zealand Susan Wheeldon said while the platform supports tourism taxes and has implemented visitor levies in other cities around the world, the Victorian government's proposal differs from the one they've put forward.
"Firstly and most critically, the levy will apply only to short-term rental accommodation, creating an uneven playing field that puts everyday Victorians who share their home behind large corporate hotel chains," Ms Wheeldon said.
"Secondly, they have arrived at a levy of 7.5 percent, which is too high and will slug travellers’ hip pockets when they can least afford it. A contribution of 3 to 5 percent across all accommodation providers will raise more, but cost travellers less.
"A tax that unfairly benefits the hotel industry over everyday Victorians is not the right approach."
However, unlike proposals by other states, she acknowledged the policy "sensibly avoids harsh measures".
"It acknowledges the valuable contribution platforms like Airbnb make to attracting guests and growing the economy, and sensibly avoids harsh measures like restrictions on the number of nights people can share their homes," she said.
"It’s about getting the balance right. Short-term rentals aren’t the cause of the housing crisis, but we believe there is more we can do to help make a positive difference like advocating for policies that promote the creation of new housing."
At a press conference on Tuesday, Prime Minister Anthony Albanese was asked if he supported the tax on short-stay accommodation.
"In my electorate, it's an issue because you have problems of accessing rentals for people because of a lack of accessibility. So, I'm very conscious of the pressure that is placed on communities," he told reporters.
"It's not surprising that governments are having a look at this. And I know that that is something that has been considered by anyone who actually looks at the housing issue with regard to housing supply."
More measures to protect renters
Alongside the short stay levy, the government has also committed to doing more to protect renters' rights.
It includes making rent bidding an offence by introducing tougher penalties for agents and landlords who break the law, restricting rent increases between successive fixed-term rental agreements, introducing a portable rental bond scheme, and extending the notice of rent increase and notice to vacate periods to 90 days.
Real Estate Institute of Victoria (REIV) CEO Quentin Kilian said the plan fails to articulate a plan to attract and retain existing residential real estate investors.
"Significant reform is needed to ensure more – not less – flexibility for residential rental providers," he said.
"We know that rental providers are seeking confidence and reassurance that a property investment now will support them in retirement. We have called repeatedly for government to prioritise investor incentivisation, to stabilise supply and relieve pressures being felt by Victorian renters competing for limited listings at a record low vacancy rate.
"With an overwhelming majority of Victorians renting from the private rental market (almost 90 per cent), in the face of rising cost of living, land taxes and interest rates, this was a missed opportunity to ease the costs associated for rental providers."
He said while certainty around rent rises between successive fixed-term rental agreements is important for renters and owners, "this must be balanced with the ability for property owners to cover increasing costs such as land tax and interest rates."