Victoria to Introduce Tax on Short Term Rentals

This week the Victorian Government announced its plan to apply a 7.5% levy to short-term accommodation platforms such as Airbnb and Stayz from 2025, in an attempt to boost housing supply and discourage landlords from converting their properties into short-stay accommodation. The proposed levy, which was announced just 2 weeks after Australia saw a record low rental vacancy rate, makes up part of the state government’s ‘Housing Statement’, which details an ambitious plan to build 800,000 homes in Victoria over the next decade.

‘Victoria’s Housing Statement’, authored by the State of Victoria (Department of Premier and Cabinet) says:

It is thought by the Property Investors Council of Australia that the levy may discourage new property investors from investing in Victoria, and cause existing investment property owners to sell.

A spokesperson for the Victoria Tourism Industry Council believes that the tax could harm tourism in the state, particularly coastal and regional areas such as Phillip Island.

Short-term rentals are commonly booked by tourists seeking an alternative to hotels. Hotels will not be affected by the levy. Tourists using short-term rental properties are concerned the Levy will be passed on to them as a consumer, which may see short stay costs balloon.

Airbnb, an industry leader for short term accommodation, has welcomed the Victorian Government’s push for more housing, however the platform disagrees with the 7.5% levy. Airbnb Australia and New Zealand public policy head, Michael Crosby, believes that the levy is “too high” and may negatively affect the Victorian tourism trade and give the hotel industry “a free kick”. Mr. Crosby believes a levy between 3-5% would be more reasonable, and more reflective of international policies.

At this stage the levy will only be applied in Victoria, however other state governments may follow suit.

Variable rate mortgage repayments have been increasing off the back of the recent spate of cash rate rises. As a result, many Australians are feeling the pinch and have turned to using their properties as short-term rentals to help subsidise costs. To them, the ‘Short Stay Levy’ could be another obstacle in an already challenging property ownership market. However, the Victorian Government hopes the levy will ease the state’s rental crisis by creating more housing opportunities for Australians.

If you’ve invested in Victoria and are concerned about how this levy may affect you when it comes into effect in 2025 or are curious whether other states are likely to implement a similar policy, reach out to your local MoneyQuest broker today to assess your finance options.

• SHARE