By Tess Macallan, Journalist, Council Magazine

Australia is currently experiencing a record-level rental crisis, attributable to a period of incredibly low vacancy rates and rising rental prices. Many have pointed the finger at the growing number of short-term rentals as a reason behind the lack of available homes, with some councils taking action to deter or restrict their presence, amongst other initiatives to curb the wider crisis.

In recent years, cities across the country have been faced with rising rental prices and low availability of rentals, which has increased housing affordability stress and pushed more Australians into homelessness.

According to research from the Australian Housing and Urban Research Institute (AHURI), the national rental vacancy rate was at 0.9 per cent in September 2022, the lowest since April 2006 (when it was 0.8 per cent for one month). This very low vacancy rate was sustained for most of 2022, a situation unseen in the last 20 years.

The low vacancy rate has pushed up rents and as a result national combined rents for houses and apartments were the highest they have ever been in November 2022, at $542 per week. There are a variety of factors causing the rental shortage, which have meant, to put it simply, that there are not enough homes available to rent. But what are the reasons behind this and how are councils tackling these issues?

No place to Stayz

Websites such as Airbnb, and Stayz offer property-listers the opportunity for high returns on short-term lets, leading to a  removal of properties from the long-term rental market.

The problem has a significant impact on high-demand inner city zones with large amounts of tourism appeal as well as tourism-heavy regional and coastal areas. This has led to some states and councils taking action to stop or deter property owners from letting on the short-term market.

In some New South Wales local government areas, there are limits on the number of days that a property can be used for short-term rental accommodation. The regulations do not apply if a host is present.

Properties in the following areas are restricted to a maximum of 180 days a year:

  • Greater Sydney region (not including the Central Coast)
  • Ballina area
  • Byron area
  • Certain land in the Clarence Valley area
  • Certain land in the Muswellbrook area

However, for one New South Wales council, the 180 day limit has not been enough to address the problem. With more than two million Australian and international visitors each year, Byron Bay has been significantly impacted by the growth of short-term rentals through websites like Airbnb.

According to data from Inside Airbnb, there are currently 3075 short-term rentals in the Byron Shire area listed on the site.

Approximately 87 per cent of those listings are entire homes or apartments. At the same time, the cost of housing in the Byron Shire has soared in recent years, with growth outpacing other parts of regional New South Wales and Sydney. With concerns of rising homelessness and rents in the region, Byron Shire Council is taking a strong stance against short-term rentals.

Last year, Council was set to vote on a proposal that would amend planning laws to reduce the number of days properties in certain zones could be rented out for tourism on platforms like Airbnb.

However, the New South Wales Government intervened on the proposal and sought the advice of the State’s Independent Planning Commission (IPC). In April 2023, the IPC published its recommendations, advising that limiting properties to 60 days would provide sufficient incentive for owners to put properties on the long-term rental market.

The decision is now in the hands of the State Government. Meanwhile, other Australian councils are using different tactics to drive short term rentals out of their communities.

Disincentivising short-term rentals

Brisbane, Australia’s third-most populated city, is also facing a lack of long-term rental vacancies and rising rental prices. As the city gets closer to hosting the 2032 Olympics, the issue of housing affordability in the city is likely to become a greater concern.

Brisbane City Council has responded to the issue by introducing a new rating category, applicable to entire properties that have been offered, available or used as short-term accommodation for more than 60 days a year.

Introduced on 1 July 2022, the Transitory Accommodation rating category requires eligible owners to pay 50 per cent higher rates than other non-owner occupied homes, meaning the average property is paying about $985 extra per year.

Brisbane Lord Mayor, Adrian Shrinner, said the new measure is aimed at both incentivising owners to return and keep properties on the long-term rental market and ensure those who use them for short-term rentals pay their fair share. “We’re one of the first councils in Queensland to introduce this reform, however we won’t be the last,” Mayor Shrinner said.

“I would be happy if this new rating category didn’t make a single dollar. Brisbane has plenty of great hotels with many more under construction, and our suburban streets were never meant to be home to mini hotels that house different tenants every week.”

Many of these properties cause complaints from neighbours, resulting in higher compliance costs that must be paid by all Brisbane ratepayers. “It is my hope that instead of paying extra, many owners will return these houses and apartments to the long-term rental market which will help ease our housing shortage.

“There is no silver bullet solution to housing affordability, but this is one way we can play a part at a local government level.” More than 700 properties have been identified for this new rating category since it was introduced, but it is uncertain how much the increase is deterring property owners from renting out short-term accommodation.

The bigger picture

Tackling Australia’s rental crisis will require more than targeting short-term rentals. Research from ANHURI found that these properties have a significant impact in specific areas, not across major cities as a whole, so what else is causing the problem?

One contributing factor is the significant increase in single person households during the pandemic, with the rate of household formation greater than the increase in new dwellings.

There is no denying that overseas migration also adds pressure on the housing and rental market. However, immigrants play an important role in contributing to Australia’s economy and helping address skills shortages. As Australia faces an aging population and declining fertility rates, overseas migration will be crucial for the country’s future.

Internal migration has also impacted the vacancy rate in rural and regional areas, as 2016 to 2021 saw a significant increase in people moving out of capital cities. Compounding the problem are the challenges facing the construction industry, including supply chain disruptions, labour shortages and rising interest rates. As a result, a number of home building companies have collapsed, while the rate of new construction has significantly slowed down.

A need for coordination

Multiple levels of government will need to work together to understand how the rental crisis is affecting communities and what can be done. One region where this is happening is in Western Queensland. The Queensland Government has partnered with the Western Queensland Alliance of Councils (WQAC) to develop Local Housing Action Plans for its 22 Councils.

Local Housing Action Plans are a commitment under the Queensland Housing and Homelessness Action Plan 2021-2025. The plans are the next step towards addressing housing challenges in rural and remote communities. They will provide an assessment of housing availability, a view of the rental market, social housing, demand for aged care and emergency housing.

The $200,000 initiative is supported by the Department of State Development, Infrastructure, Local Government and Planning, and the Department of Communities and Housing. In a 2022 statement, Queensland Deputy Premier and Minister for Local Government, Steven Miles, said the plans are an important step towards finding local housing solutions that will meet the individual needs of local communities.

“Affordable and available housing remains an issue in all corners of the state, with our rural and remote communities facing unique challenges,” Mr Miles said. “These plans will equip councils to better respond to a range of immediate, emerging and longer-term housing challenges.

“The Western Queensland Alliance of Councils has been leading the way with its work in examining the key factors affecting housing in each of these communities. “This gives local governments a clearer path forward to respond to housing needs and help ensure more Queenslanders have a place to call home.

“We are committed to working with councils to address housing issues and improve the liveability and economic sustainability of communities in Western Queensland.” All action plans are set to be completed by June 2023. In late 2022, WQAC Leaders welcomed the release of the initial pilot plans.

Carpentaria Shire Council Mayor and Chair of the North West Queensland Regional Organisation of Council, Jack Bawden, said, “Getting Local Housing Action Plans off the ground means we can identify solutions sooner and coordinate responses to the housing challenges facing rural and remote council areas.”

Mayor of Longreach Shire Council and Chair of the Remote Area Planning and Development Board, Tony Rayner, said, “The 22 councils of Western Queensland all face similar housing shortages and the best way of addressing this problem is by working together.”

The Western Queensland initiative shows how a lack of affordable housing is a major problem across the country that will require coordinated intervention with multiple government bodies. While much of this will occur at the state and federal levels, some councils are taking unique approaches to address the issue at a local level.

What else can be done

Another way councils can help increase the supply of housing in their communities is by facilitating and encouraging innovative housing solutions. In 2022, Surf Coast Shire Council announced that it would be conducting a new trial of tiny houses on wheels to address the shortage of affordable housing and worker accommodation.

Tiny houses on wheels currently do not feature in Council’s local law and their temporary use falls between the planning scheme and the camping provisions of the local law. Considerations around regulation of mobile tiny homes will include wastewater management, building regulations, appropriate locations in consideration of bushfire risk and emergency management, vegetation removal and the impact on neighbourhood amenity.

Council resolved at its December 2022 meeting to support a trial to better understand complex issues surrounding the use of tiny houses on wheels before reaching a formal local law position. A proposed two-year trial will allow further community consultation, development of criteria and an application, permit and monitoring process – and assessment of impact on Council resources.

Under the trial, which is likely to start this year, people will be able to apply to Surf Coast Shire Council for a permit to temporarily live in a tiny house on private property. Council will not be providing land to potential tiny house on wheel owners and they will need to make their own rental arrangements with land holders.

Ideas such as tiny homes or accessory dwelling units are novel solutions for increasing housing supply and will be dependent on local circumstances. It is just one example of Australian councils taking initiative to implement measures to alleviate the shortage. There’s no quick fix to Australia’s rental crisis.

A concerted effort from all levels of government, including local councils, is required to ensure Australians have access to secure and affordable housing in the years to come. The consequences of inaction will be growing housing affordability stress and larger numbers of Australians facing homelessness.


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