The Allan Government’s proposed 7.5 per cent ‘Airbnb tax’ is coming under fire, with critics warning that the move will have little impact on Victoria’s housing crisis while driving up costs for holidaymakers.
New research suggests that the majority of property investors are unlikely to switch to long-term rentals, a key aim of the government’s plan.
The legislation, set to be debated in Parliament this week, looks to address the state’s housing shortage by encouraging short-stay property owners to move their properties into the long-term rental market.
However, a survey conducted by New Focus Research has revealed that over 90 per cent of the 500 short-stay property owners surveyed have no plans to let go of their investments.
CEO of the Real Estate Institute of Victoria (REIV), Kelly Ryan, said the proposed tax could do more harm than good, stating that it is unlikely to achieve its intended goals.
“I think, more than likely, it will hinder efforts to alleviate the housing crisis,” Ms Ryan said.
“The perception of yet another tax on the horizon is certainly not helpful, and I’m not convinced it will lead to a significant shift of properties from short-stay to long-term rentals.”
Ms Ryan’s concerns were also echoed by tourism operators, who warn that the tax would be passed on to consumers, further increasing holiday costs at a time when many Australians are already feeling the pinch of a cost-of-living crisis.
The survey also found that 51 per cent of respondents indicated they would reduce their travel, and 55 per cent said they would shorten the length of their stays due to rising costs.
Ms Ryan said that rather than improving the housing situation, the new tax might actually drive investors out of the market.
“Investors might just leave the market entirely, which would reduce the pool of properties available for any purpose—whether short-term or long-term,” she said.
“I don’t see this move bringing a significant number of properties back into the long-term market.”
The introduction of the new tax follows a series of regulatory changes in Victoria, which she said have already placed extra strain on property investors.
“The market has faced several years of significant changes, from rent freezes during COVID to mortgage rate hikes, new land taxes, and more stringent regulations,” Ms Ryan said.
“All of these factors have increased the cost of owning and managing investment properties.”
Ms Ryan also said that property investors have other options, including investing in other states or pursuing safer alternatives such as term deposits.
“We’re not seeing any capital growth in Victoria, but other states are offering higher returns.
“With more viable options available, people are reconsidering their investments.”
Ms Ryan said now is actually the time to focus on incentives for investors rather than disincentives.
“It’s time to look at encouraging investors rather than discouraging them,” she said.
“The market needs stability, not more uncertainty.”
