City of Melbourne to Cap Airbnb and Short-Stay Accommodation Availabilities

Reforms in short-stay accommodation sector will improve housing availability, city says

Lionel Bonaventure/AFP/Getty Images

The City of Melbourne has decided to address housing availability concerns by proposing new regulations aimed at short-stay accommodation providers.

The city plans to introduce a $350 (US$226) registration fee for such providers and impose a yearly cap of 180 days on listings available on platforms such as Airbnb and Stayz.

These local laws were approved during a meeting on Aug. 28 and are slated for implementation by February 2024 after a consultation process.

Melbourne’s Lord Mayor Sally Capp emphasised that the current usage of 14 percent of residential premises for short-term stays was exacerbating a “housing crisis” within the city.

These measures will align Melbourne with numerous other global cities, as the city currently lacks planning permit requirements or limits on the duration of short-term property rentals.

Move Aims to Improve Housing Availability

The primary goal of these short-stay accommodation reforms is to stimulate housing availability in the long-term private rental market.

By halving the maximum allowable short-stay duration each year, property owners will be compelled to lease their properties to long-term tenants for cost-effectiveness.

In the City of Melbourne alone, Airbnb watchdog “Inside Airbnb” reports that there are more than 6,700 apartments currently listed on the short-term rental market, with a high concentration of listings in Southbank, Docklands, and the CBD. The council is expecting this move to free up a significant number of apartments for longer term leases.

Airbnb has Concerns About Proposed Changes

Regarding the $350 registration fee, Michael Crosby, head of public policy for Airbnb Australia and New Zealand, told The Epoch Times that, “Airbnb supports opt-in tourism levies, especially in high-tourism areas.”

He further noted that such a levy would ensure that every accommodation booking in Victoria contributes to new housing projects and supports local infrastructure without placing the burden on local ratepayers or small businesses.

However, Mr. Crosby expressed reservations about the proposed cap on the number of nights a short-stay property can be leased, considering it unfair to Airbnb hosts.

He argued that the council’s proposed cap does not clarify how many homes would return to the long-term market and could potentially strain household budgets that rely on income from renting out rooms or properties for short term accommodation, citing a recent survey indicating that 40 percent of Victorian Hosts rely on hosting income to balance their household budget.

Airbnb Disputes City of Melbourne Figures

Airbnb also contested the City of Melbourne’s estimation that 14 percent of Melbourne’s residential properties were being used for short-term rentals, suggesting this figure likely originated from third-party “scrape” data.

Airbnb’s own research suggests that the proportion of residential stock available for short-term rentals is closer to four percent, significantly lower than the city’s estimate.

Furthermore, Airbnb challenged the city’s assertion that short-term rental accommodations provide limited economic benefits to the local community, characterising the claim as “dubious.”

Mr. Crosby pointed to an upcoming report by Oxford Economics, which found that in 2022, guests staying in Airbnb listings contributed over $1.2 billion to Greater Melbourne’s GDP, supporting 11,400 jobs across various sectors, including retail and hospitality.

Benefits of Short-Stay Accommodation

Short-stay accommodation providers, such as Airbnb, offer several advantages, including the opportunity for individuals to monetise their extra living space, diversify tourism options, and provide unique lodging experiences for travellers.

They are generally more cost-effective and conducive to longer stays than traditional hotels or motels.

These platforms empower homeowners to generate additional income by renting out their spaces for shorter durations.

Moreover, they offer a broader range of lodging options, often in neighbourhoods where hotels and motels are less prevalent, allowing guests to immerse themselves in local cultures.

Tourist Levy

The move to limit short-stay accommodation providers comes after the state government revealed it was considering a $5 levy on all short-term stays.

Victoria Tourism Industry Council (VTIC) said such a proposal would hurt the tourism industry while doing nothing to help housing affordability.

“The fact that this tax is being proposed on all forms of short-term accommodation isn’t just going to impact international and interstate visitors; this tax is going to hit Victorians hardest, when you consider that 80 percent of the visitation to regional Victoria comes from Victorians travelling around their own state,” VTIC CEO Felicia Mariani said.