Houses in melbourne

The City of Melbourne has announced that it will be encouraging short-term accommodation operators to switch their properties to the long-term rental market, in an effort to ease the housing rental housing crisis. 

Melbourne has one of the biggest short-term rental markets in the country, with more than 4,100 residential properties currently being used for short stays in the City of Melbourne.  

This means fewer homes available for people wanting to live in Melbourne, including key workers and students. 

As Australia’s fastest growing city, Council must consider all options to create more housing supply.  

At a council meeting on 29 August, councillors will vote to commence a consultation process to inform the development of new local laws that are designed to encourage the flip of short-term accommodation into long-term rentals. 

If endorsed, Council will consult extensively with the community and key stakeholders – including short-term rental owners and operators – on any new policy options for the short-stay accommodation sector. Any new regulation would not be introduced until February 2024.  

Options under consideration include a registration fee and a cap on the number of days a property is available for short-term rental. 

A short-term rental accommodation local law would not apply to hotels or motels. The proposed changes are designed to ensure the city’s tourism sector continues to thrive, with more than 10,000 new hotel rooms becoming available in the past two years.  

Housing is primarily a responsibility for the State and Federal Governments, and Council will continue to do what it can to advocate for practical solutions to increase the housing supply. 

City of Melbourne Lord Mayor, Sally Capp, said that the city is in a housing crisis, and that every home that becomes available matters. 

“That’s why we’re looking at ways to encourage property owners to move into the long-term rental market,” Mayor Capp said. 

“As Australia’s fastest growing city, we are considering all options that will deliver more housing – and the quickest way to do that is to utilise housing that is already in place. 

“Based on benchmarking from other capital cities and municipalities, an annual registration fee for short-term rental properties may be set at $350, and a short-term rental cap may be set at 180 days. 

“This would be an important step to address the housing crisis and increase the number of homes available to our residents, students and key workers.”   

Finance, Governance and Risk portfolio lead Councillor, Philip Le Liu, said that Council knows there are over one million unoccupied homes across the country, and that short-term accommodation is a significant factor driving this.    

“Given the current discussions by both the Federal and State Governments around housing, our goal is to better understand the short-term rental industry, and to help shift short-term rental properties onto the long-term rental market so more Melbournians have choices,” Mr Le Liu said.

Industry response

Stayz Senior Director, Government & Corporate Affairs, Eacham Curry, said that introducing new fees or restrictions on the number of nights short-term rentals can operate will not introduce more homes to the long-term rental market in Melbourne.

“It will only limit accommodation options for tourists and income for mum and dad retirees. Stayz supports fit-for-purpose regulation of the short-term rental sector,” Mr Curry said.

“We have consistently advocated for a state-wide registration process, a mandatory code of conduct, and an industry-funded industry body to adjudicate community issues. We urge the Victorian government to introduce sensible regulation without sacrificing tourism or leaving these issues up to councils like City of Melbourne to solve on their own.

“Short term rentals make up less than 3 per cent of Australia’s housing stock. Queensland’s recent Housing Review found that housing supply has the greatest impact on affordability and there is ‘no clear alignment between suburbs with the highest rent increases and the percentage of dwellings devoted to short-term rental’.

“The review found that there are several issues with night caps. First, there is no ‘magic number’ supported by empirical evidence. Various numbers have been trialled but have been found to be arbitrary. Most importantly, there is limited evidence to suggest that these would improve housing supply.

“Stayz encourages the Victorian government to follow Queensland’s commonsense approach grounded in data and research. This will provide a sound basis to inform effective and meaningful policy development. We also recommend the introduction of a compulsory State-wide register, similar to those already in place across New South Wales and Tasmania.”

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