Victoria moves to impose STRA tax
The state has taken the first step forward in its promise to impose a new tax on short-term rental accommodation (STRA).
The Short Stay Levy Bill 2024 was introduced into Victorian Parliament today, as the state moves to introduce a 7.5 per cent levy from 1 January 2025 on short-stay accommodation bookings, such as those made through platforms like Airbnb and Stayz.
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With this legislation initially announced as part of Victoria’s housing statement, the state government detailed that consultation sessions with “local councils, industry and tourism bodies” have helped to ensure the bill’s final policy is “right for communities across Victoria”.
According to the state, it is currently home to over 63,000 short-stay accommodation places, with just under half of these properties located in regional Victoria, and 50,000 of which are entire homes not available for long-term rental.
With the new levy expected to generate around $60 million a year, the Victorian government relayed that all revenue will be given to Homes Victoria to support the “building and maintenance of social and affordable housing” – with 25 per cent of funds to be specially invested in regional Victoria.
Minister for Housing Victoria, Harriet Shing, said the new bill would “support the delivery of more social housing and encourage more people to use their properties for permanent rental accommodation across the state.”
Notably, the new laws will not apply to home owners who lease out all or part of their principal place of residence for a short stay, with the state government stating that “when a home owner goes on holiday and someone else stays there temporarily, the levy does not apply”.
Alongside commercial accommodations such as “hotels, motels and caravan parks” being exempt from the new legislation, the levy would also only apply to accommodation periods which last for less than 28 days.
The state government also highlighted that it is seeking to implement transitional arrangements, with the new laws not applicable to bookings made prior to 1 January 2025.
The new laws would additionally enable owners’ corporations to ban short stays in their developments if approved by 75 per cent of owners, with further changes to the planning system set to give local councils the “power to regulate short-stay accommodation”.
With the Victorian government’s move to regulate short-stay accommodation following similar measures in NSW and Western Australia, Treasurer of Victoria Tim Pallas said the new bill would unlock “more homes for real rentals” and provide “more funding for social housing”.
“This is an important step towards making more properties available for long-term rental – and we’ve consulted with the sector to make sure we’ve got the balance right,” he said.
In reaction to the new bill, Housing Industry Association chief economist Tim Reardon offered a contrary viewpoint, and said the legislation would “not improve housing supply or reduce pressure on public housing stock”.
“Governments cannot increase the supply of housing by taxing them more, even if the revenue is allocated to new public housing stock. This is an own goal that will further reduce housing supply and place more pressure on public housing stock,” he said.
The chief economist agreed that “Victoria requires more public housing stock”, but expressed that “public housing is a public good and should be paid for by all Victorians, not a tax on a narrow cohort of renters or households”.
“Burdening new home buyers and renters with the cost of providing public or subsidised housing is part of the cause of this housing shortage, not the solution,” he concluded.