The potential policy shift has raised concerns about its impact on towns along the Murray River border, such as Corowa and Rutherglen.
Approximately 100 short-stay accommodation sites are listed on the Airbnb platform in Corowa, Rutherglen, and Wahgunyah, making it a reasonably significant industry in the region.
The Victorian government’s proposed tax aims to encourage property owners to offer their properties for long-term rentals, thereby increasing housing supply and potentially alleviating the housing crisis.
NSW Premier Chris Minns expressed openness to the idea of following Victoria’s model, which includes a 7.5% tax on short-term rentals. He highlighted the “extreme” reduction in available rental properties attributed to platforms like Airbnb.
NSW Treasurer Daniel Mookhey has directed Treasury to study Victoria’s tax and assess its effects, both domestically and abroad. Short-term rentals have been identified as contributing to the depletion of available rental stock in New South Wales.
As of May 2023, there were 45,209 short-term rentals registered in NSW, indicating a significant increase of 13,000 since December 2021. Meanwhile, Victoria currently boasts over 36,000 short-stay accommodations, with nearly half of them located in regional areas.
New South Wales is currently reviewing its rental laws, and the potential levy on short-term rentals is among several initiatives being considered to address housing availability issues.
NSW Housing Minister Rose Jackson is set to meet with the Andrews government in Victoria in the coming weeks to examine the modeling that led to the 7.5% Airbnb levy and determine whether it could help mitigate the rental crisis in NSW.
Premier Minns, who pledged no new taxes when elected, emphasized that no decision had been finalised yet, downplaying concerns that the tax would be equivalent to a new levy.
Corowa short term rental owner Kaz Hughes said if NSW were to follow suit with implementing a tax, she would have no choice but to put her rates up.
The biggest issue for short term rental owners here is that it’s not as easy attracting out of town visitors to Corowa as it is to say Yarrawonga or even Rutherglen,” she said.
“But it wouldn’t be the cause of me ceasing to operate. Perhaps Airbnb could consider taking a service fee cut and share the pain.
“In saying that, if we all put our rates up it shouldn’t really impact competitiveness. Prices will simply go up across the board.
Ms Hughes said she wouldn’t consider switching her property to long-term rentals if a tax on short-term rentals is implemented.
“I do it for the flexibility. Long term rentals obviously lock in the tenants for long periods,” she said.
“With a short-term rental, I can use my own home to generate some occasional income. If I had a long-term tenant, I would have nowhere to live myself.
“Residential tenancy laws are so heavily weighted in favour of tenants and that’s a big reason there’s a shortage of housing. I don’t think I would convert to have a long-term rental even if I didn’t need to live in the house.”
Corowa short-term rental owner Tony Horne said he was yet to see anything concrete from the NSW Government.
“If it’s a 7.5 per cent increase, the cost could be absorbed but if you look at what other countries have done, you could be looking at a 10-15 per cent increase. Any higher than 7.5 per cent and it will have to be passed on,” he said.
“I’ve been in the long term rental space before and I wouldn’t go back to that, because the laws favour the renters more.
“There’s also questions around the transparency and how much of the generated funds will go towards the improvement and expansion of social housing.”
Rutherglen short term rental owner Robert Kennedy said he didn’t quite understand how the Victorian Government expected the tax to incentivise investors to transition their properties from short-term rentals to long-term rentals or sell them.
“We should consider why long-term rentals were abandoned initially,” he said.
“Increased land taxes have made holding long-term rentals more costly, and tenant rights have shifted heavily in favour of tenants, encompassing aspects such as ongoing maintenance, pet allowances, and cosmetic property alterations.
“Tenant turnover can also be challenging, requiring a minimum of 60 days. These factors have led many investors to opt for short-term rentals, which offer higher daily returns, greater control over maintenance standards, and fewer issues related to problem tenants or property damage.”
Victoria’s tax has drawn criticism, particularly from Liberal Member for Northern Victoria Wendy Lovell. She expressed concerns about the impact of Victoria’s upcoming 7.5% Holiday and Tourism Tax, set to take effect in 2025, on towns along the Murray River, which rely heavily on tourism.
Ms Lovell argued that the tax would increase the cost of a long weekend away by over $100 and potentially divert tourists to nearby towns in New South Wales where such taxes may not apply, adversely affecting Victorian border towns.
“Tourists will decide to stay in cheaper accommodation, and this tax is just another blow to regional small businesses by the uncaring and broke Andrews Labor Government.”
Ms. Lovell further claimed that this tax would not only hurt accommodation providers but also lead to a reduction in tourism revenue, particularly in border towns.
However, a Victorian Government spokesperson has refuted the idea that border towns are going to be uniquely impacted.
“The levy will not impact regional tourism,” the spokesperson said.
“Regional Victoria, including border towns, have great nationally and internationally renowned attractions.
“This will not change because of a modest levy invested back into regional communities to help house more regional Victorians.
“It applies equally across Victoria with 25 per cent of the revenue to go towards regional Victoria to pay for more and better social and affordable housing.”
Victoria Tourism Industry Council (VTIC) Chief Executive, Felicia Mariani, said the extra tax could not come at a worse time, with the latest Tourism Research Australia data showing domestic overnight tourism spending in regional Victoria fell 21 per cent in May, and 16 per cent in June, compared to the same time in 2022.
“VTIC lobbied hard against the proposed bed tax, and we’re relieved the tax will not apply to hotels and motels, but it’s a terrible time for any new consumer tax on holidays,” Mariani said.
“What the Victorian Government is proposing is not a tax on short-stay platforms or property owners, it’s a tax on consumers who rent those properties.
“If you’re a family that spends $1000 on a rental, get ready to pay an extra $75 to the state government. That’s money that would otherwise flow into local shops, cafes, or tourism experiences during your holiday.
“Asking consumers to pay more for their holiday rental won’t magically increase housing supply. This policy will not encourage property owners to take their houses off Airbnb and return them to the long-term rental market.”
