Victoria look to diminish short-term rental strategy

Starting January 1, 2025, new rules backed by the Victorian Greens will give local councils and owners' corporations more power to control or even ban short-term rentals (STRA) in their areas.

Councils can decide how many STRA properties are allowed, limit the number of days they can be rented, or ban them entirely. Owners' corporations can also ban STRA in their buildings if 75% of the owners agree.

This levy is expected to generate approximately $37.5 million in 2024-25, with projections rising to $75 million annually from 2025-26.

The funds raised from the levy will be allocated towards social and affordable housing initiatives. Importantly, this levy will replace existing local council charges on short stay accommodation. However, some regional local government areas (LGAs) have expressed concerns over the 3:1 revenue split from the new tax.

One key aspect of the reforms is that property owners who lease out their own primary residences will be exempt from paying the levy. These reforms are scheduled to be presented to parliament this week.

Stayz spokesperson Eacham Curry covered that the goal here is to essential raise money for housing initiatives. "These changes will undermine the original purpose of the levy; to raise money for social housing initiatives, and risks creating bureaucratic complexity that will drive away tourism dollars"

We shall track how investors approach this wall and if this strategy will be still viable through 2025.

Stay connected with me to keep up to date on the latest developments in the short-term rental market.