By Broede Carmody and Rachel Eddie
Airbnb properties that are the owner’s primary place of residence will not be hit with Victoria’s 7.5 per cent short-stay levy when it comes into effect in January.
The Allan government’s short-stay levy bill, which was introduced to parliament on Tuesday, will also give owners’ corporations and local governments stronger powers to limit or ban short-stays. But the industry fears property owners could now be double-hit with council taxes.
Victoria’s statewide Airbnb levy will come into effect on January 1 next year. Credit: Joe Armao
The government announced the levy in last September’s housing statement to respond to a shortage of housing supply and an affordability crisis.
On Tuesday, Treasurer Tim Pallas announced that principal places of residence would not be liable for the 7.5 per cent levy when it comes into effect on January 1, 2025.
So long as a tourist books the accommodation before New Year’s Day, their trip will not be caught by the levy. The property owner, not the tourist, is charged. However, this cost is likely to be passed onto holidaymakers.
The government said there were around 63,000 short-stay properties in Victoria, almost half of which were in the regions. Almost 50,000 of those places were entire homes that could be on the long-term rental market instead.
Pallas said the purpose was to bring more housing onto the long-term rental market, but he could not say how many properties were expected to shift. Hotels will be exempt.
Revenue from the levy, expected to raise about $60 million a year, will go to Homes Victoria to support the building and maintenance of social and affordable housing.
“So it’s not like the pricing mechanism is going to be destructive of the industry, but it is important that we recognise and that we give a signal to the market that our priority is to get people into homes, and long term secure rental accommodation is important,” Pallas said.
Four Victorian councils have their own Airbnb charges, meaning some short-stay homeowners could be double-charged.
Victoria Tourism Industry Council chief executive Felicia Mariani said this would be devastating for local tourism. She said short-stay platforms were still unclear how the new regime would work and said there had been a lack of consultation with the industry.
“There’s only three months now to figure out how this tax is going to work in practice and the government is relying on the short stay systems to make changes in their systems they don’t have capacity for,” Mariani said.
“On top of that, industry is now in a terribly exposed position as local councils have been given a green light to slap an additional tax on top of what is already in place, meaning this could end up being a 15 or 20 per cent tax in reality, or more.”
The government had negotiated with the Greens for weeks to ensure the levy’s smooth passage through parliament.
Greens rental rights spokeswoman Gabrielle de Vietri said the negotiated reforms would go some way to stopping property investors “hoarding homes for profit”.
“Communities across Victoria are sick to death of property investors snapping up homes to cash in on Airbnb while locals struggle to find somewhere to live,” de Vietri said.
The Coalition opposes the levy, and Opposition tourism spokesman Sam Groth had labelled the levy a tax on tourism.
Opposition Leader John Pesutto said Victorians were already doing it tough during a cost of living crisis.
“Why would you make it harder on the tourism sector? Why would you make it harder on Victorians and Victorian families just to take a much-needed holiday once or twice a year?” Pesutto said.
Housing Industry Australia chief economist Tim Reardon said the bill would not improve housing supply and described is as an own goal.
“No one supports landlords withholding homes from market. But the proposition that another tax on short-stay accommodation will increase housing supply or make more homes available for rent, in the long-term, lacks logic,” Reardon said.
“The ‘first order’ effect of a tax on short-term rentals may see some rental properties become available for long-term accommodation. The ‘second order’ effects will negate this benefit. Fewer short-term rentals and growing demand will see the rent on these properties continue to rise, attracting landlords back out of the long-term rental market.”
Owners’ corporations will also be empowered to prohibit short-stay accommodation within a strata scheme, provided the property in question is not the host’s primary residence. To ban Airbnb and other properties from a development, 75 per cent of owners would need to agree.
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