Investors who rent their property out on short-stay accommodation platforms like Airbnb and Stayz will soon face an additional tax charge.

The Victorian government has announced it plans to introduce a 7.5% levy on short-stay rental platforms, effective from 1 January 2025. The fees collected will fund Homes Victoria, supporting their work building and maintaining social and affordable housing across the state. Additionally, a quarter of the revenue collected is earmarked for regional development.

How will it work?

Draft legislation imposing the levy has not been publicly released yet. Consequently, it’s unclear if the 7.5% levy will be based on the platform’s Victoria revenue alone or extend to their nationwide revenue.

Additionally, it has not yet been stated whether this levy will also apply to hotel booking platforms.

Current short-stay bylaws

Several popular tourist towns in the state had previously introduced their own local council bylaws and charges to manage short-stay rentals in their towns. These included requiring short-stay rentals to be registered with council or additional annual fees paid to the council. These will likely be removed, replaced by the state-wide levy.

Short-stay rentals are currently also governed by the Owners Corporation Amendment (Short-stay Accommodation) Act 2018. These bylaws aim to give owners corporations tools for managing unruly short-stay guests.

The announcement has been met with criticism, with both Airbnb and Stayz saying this unfairly penalises hosts and tourists. Critics have also argued this will not result in the pivot to long-term accommodation the state is hoping for, but rather that investors will simply sell their properties instead.

Freya Southwell is a property lawyer and principal of Sutton Laurence King Lawyers.

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