Adelaide City Council budget proposes short-term accommodation owners pay more than residential rates

Short-term accommodation owners will face higher charges in Adelaide under a council plan to recategorise their investments for the sake of “fairness and equity”.

Mini Mansion Adelaide Airbnb owner Billie Justice Thomson says Adelaide City Council's higher rate fee for owners of short term accommodation is not unreasonable. Picture: Kate Bowman

Owners of short-term accommodation, such as Airbnb and Stayz properties, will be slugged hundreds more in rates, under a proposal by Adelaide City Council.

In its draft 2024/25 budget, residential properties predominantly used for short-stay rentals will be deemed ‘commercial-other’ where a higher rate in the dollar would apply.

It means property owners who paid an average of $2090 in residential rates last financial year, will pay 22 per cent more on top of their rates – about an extra $450 – in 2024/25.

Lord Mayor Jane Lomax-Smith said subletting platforms were aware of the proposal – similar to levies touted interstate – which was about “equity and fairness”.

“Some people have said it’s about pushing short-stay into the rental market to alleviate the housing crisis, but the reality is significant money is made in short-stay accommodation,” Dr Lomax-Smith said.

Lord Mayor Jane Lomax-Smith. Picture: David Mariuz

Adelaide City Councillor Phillip Martin

“If you’re running a business you should not be charged on a residential level, so it’s fairness to other operators.

“We’re not lifting the rates for someone who is an investor and rents the property for a year, they will still have residential rate levels.

“We’re only lifting the rates for short-stay accommodation – it’s not a huge amount, it’ll be tax deductible and it will support street cleaning, maintenance, parklands and fairness.”

Mini Mansion Adelaide Airbnb owner Billie Justice Thomson, whose apartment champions the work of South Australian artists and makers, said the extra charge wasn’t unreasonable.

“I don’t think it’s unreasonable we pay a bit more if it only equates to one or two nights a year in Airbnb revenue,” Ms Thomson said.

“It’s a business and we profit off that business, so it makes sense to me.”

The council’s draft budget was discussed at a committee meeting on Tuesday night and included a 6.9 per cent rate rise, however councillor Philip Martin successfully pushed for staff to investigate it being “5.9 per cent or less” by cutting costs from grant, sponsorship and strategic partnerships programs.

“It is appropriate time for us to consider all of the options and I and a number of my colleagues believed – at the urging of the Lord Mayor – that there is room for cuts,” Cr Martin said.

“If we’re imposing an increase on ratepayers there is an obligation to make sure we’ve tightened the belt as close as we can to the last notch.”

Belly Dance Amethyst dancers at last year’s WellFest Adelaide, Natalie 7, Claire McDonald, Isla, 4, and Hailey, 9. Picture: Keryn Stevens

The council plans to reintroduce the pensioner rates rebate of $100 per household for eligible concession card holders – with 1174 residents eligible to apply.

Councillors have also committed to 1.5 per cent of rates revenue – just over $2m – to upgrade parklands buildings, which were previously deemed “unsafe” and an “embarrassment”.

“The council has for decades maintained a policy that the lessees of community buildings … are responsible for the maintenance and the upgrade of facilities,” Cr Martin, who proposed the rates allocation, said.

“The resolution of the council … means we have finally accepted responsibility for the upgrade of parklands buildings.”

An updated copy of the draft budget will be presented at the council meeting on Tuesday night before being released for public consultation on Friday, April 26.

It includes a capital works program of $114.4m, which includes $56m for asset renewal for more than $2bn of council-owned assets, such as roads, footpaths and parks.

The draft budget generates a $9.37m surplus, while total borrowings are projected to increase by $28.1m be $70.2m by the end of the financial year.

Fees and charges will increase by 3.25 per cent.

The draft document also included the budgets for council’s subsidiaries: Adelaide Economic Development Agency, Adelaide Central Market Authority and Park Lands Authority.

It was proposed AEDA strip all of its $400,0000 funding for WellFest – a three-day wellbeing festival introduced in 2022 following Covid, which would end the event.

Originally published as Adelaide City Council budget proposes short-term accommodation owners pay more than residential rates