UPDATED: Regulations approved in principle in Melbourne

Australia: The City of Melbourne has approved new regulations in principle for short-term rentals, including introducing registration fees of up to $350 a year and a mandatory 180-day renting cap.

On Tuesday [29 August], the council held a vote on a consultation process to determine the next step for short-term rental regulations, as it seeks to “encourage” more property owners to switch to long-term rentals and increase housing supply.

According to Melbourne Lord Mayor Sally Capp, any new regulation would not be brought in until at least February next year and it would apply to neither hotels nor motels. It is estimated that around 10,000 new hotel rooms have been added in the city in the last two years alone.

Unlike in many other cities around the world, Melbourne currently has no limit on the number of nights a property can be rented out for on a short-term basis, nor is there a requirement for a planning permit.

Figures released by the City of Melbourne indicate that 14 per cent of all residential premises in the city are used for short-term rental accommodation, of which there are 4,100 short stay properties and an estimated 5000 homes or apartments listed on Airbnb.

Capp said that this was creating a “housing crisis” by reducing supply in the market, particularly for residents, essential key workers and students, as the council seeks to push more property owners towards the long-term rental market. She added that the rental vacancy rate in Melbourne currently sits at 0.8 per cent – below a healthy average vacancy rate of around three per cent – and there was a significant shortfall of around 5,500 affordable housing units to be filled in the local government areas.

Before the decision was made on the consultation process, Capp said that “all options” needed to be on the table, including registration fees and a potential annual cap on the number of days a property can be rented out each year.

Airbnb and Australian listing service Stayz [acquired by Expedia-owned HomeAway in 2013] have both advocated for a standardised registration process across Victoria [where Melbourne is the state capital], instead of leaving each of its 79 councils across the state to enforce their own individual policies.

At the same time, some experts have said that capping the number of nights a year a property can be rented out for in Melbourne will have little impact on preserving housing stock.

Professor Nicole Gurran, an urban planner and policy analyst at the University of Sydney, told The Guardian: “I doubt a $350 fee would be enough of a disincentive if you really wanted to rent to tourists rather than to local residents.”

Elsewhere in Australia, a 60-day annual cap on short-term rentals has been mooted in Byron Bay in New South Wales and Brisbane City Council is funding a Short-Stay Accommodation Taskforce to establish a regulatory framework for the Queensland state capital within the next 12 months.