Victoria
Melbourne in Victoria [Unsplash]

Landmark STR levy to come into effect in Victoria from 2025

Australia: The government in the southeastern Australian state of Victoria has announced a landmark 7.5 per cent levy on revenue collected by short-term rental accommodation providers, which will come into effect from 2025. 

The ruling came about as part of a raft of measures announced by Victoria’s Premier, Daniel Andrews, that are expected to raise around $70 million on a yearly basis to fund the construction of social and affordable housing across the state.

As a first widespread levy of its kind in Australia, it will apply to short-term rentals booked on platforms such as Airbnb and Stayz [part of Expedia Group after being acquired in 2013 by Vrbo – formerly HomeAway] and the redevelopment of 44 monolithic public housing towers that were built after the Second World War.

Andrews said that the 44 towers in question, namely the Carlton, Flemington and North Melbourne Victorian-style towers, were “crumbling” and needed to be replaced by 2051 to be suitable for staff and residents. Andrews labelled it “undoubtedly the biggest urban renewal project in our state’s history – and potentially our nation’s history”.

Under the plans to sell and develop “surplus” land across 45 sites in Victoria, at least 9,000 new homes are expected to be made available and around 80 underused or empty office buildings may be converted into long-term residential properties, increasing the amount of social housing by ten per cent in the process.

The measures are further designed to strengthen protections for renters by making rent bidding illegal and forbidding landlords from raising rents for 12 months after asking the previous tenant to leave the property, as well as accelerating approvals processes for major projects that can bypass councils.

The government in Victoria predict that the levy, described as “modest” by Andrews compared to higher lodging and tourism taxes in some destinations around the world, will enable more than 13,000 homes to come to market and 800,000 new homes to be built over the next decade.

Planning Minister Sonya Kilkenny also announced that five developments have been approved that will contribute a significant number of new homes to the housing market in Victoria.

Any other local council charges currently being applied to short-term rentals in Victoria will be taken away once the levy comes into effect as expected in two years’ time.

Susan Wheeldon, country manager of Airbnb in Australia and New Zealand, said that while the company supported fair tourism taxes globally, the levy would “create an uneven playing field” with large corporate hotel chains and “slug travellers’ hip pockets when they can least afford it”. Wheeldon said that short-term rentals in Victoria make up less than one per cent of total housing stock, although she acknowledged that solutions are required to build more affordable and public housing.

Eacham Curry, senior director, government & corporate affairs at Stayz, said prior to Wednesday’s announcement: “Imposing a consumer-facing levy on short-term stays that could be as high as 7.5 per cent does not represent the best or most equitable way to address concerns around the impact of short-term accommodation and nor should the short-term accommodation sector be painted as the cause of or solution to the housing crisis Victoria is facing.

“Based on research conducted by ACIL Allen in 2019 on the Economic Contribution of short-term rental accommodation in Australia, an ill-conceived levy of the kind being suggested by the Victorian Government, puts at risk more than $1.5 billion in economic benefits to the States and over 9,500 FTEs,” added Curry.

Keiran Craig-Jones, executive director of the Short Term Accommodation Association Australia [STAAA], joined ShortTermRentalz’ round table webinar on advocacy in the short-term rental industry this week – watch the recording here now.

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