Housing crisis prompts council action on short-stays

The City of Melbourne is the latest Victorian local council looking at doing what it can to mitigate the growing number of short-stay apartments in its municipality in a bid to open the market to more long-term renters in the city.

At their August 29 meeting, councillors voted in favour of introducing an annual registration fee of $350 per property and a 180-day cap on the number of days a property can be leased for short-stay accommodation per year.

The policy position adopted by the council recognised a “need to track and regulate the short-term rental accommodation industry to relieve a tight housing rental market by increasing the availability of housing being used for longer-term homes for people”.

Council management will now begin a consultation process with the community and stakeholders to inform the draft local law with a report to come back to councillors in November.

The City of Melbourne is home to one of the biggest short-term rental markets in Australia, with council data showing around 4100 active short-term rental listings, which represents around 14 per cent of the city’s residential properties.

The overwhelming majority of these properties (84 per cent) are located in the CBD, Docklands, Southbank and Carlton.

However, Inside Airbnb lists much higher figures than the council’s data, currently showing there to be more than 6700 active properties on the short-stay market in the municipality.

With the motion endorsed by councillors on August 29, the council says it will consult extensively with the community and key stakeholders, including short-term rental owners and operators, on any new policy options for the sector. Any new regulation would not be introduced until February 2024.

Lord Mayor Sally Capp said the options under consideration represented an “important step to address the housing crisis and increase the number of homes available to our residents, students and key workers”.

“We are in a housing crisis,” Cr Capp said. “Every home that becomes available matters. That’s why we’re looking to encourage property owners to move into the long-term rental market.”

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.”

If successful, the City of Melbourne would join the Bass Coast and Warnambool Shires, as well as Frankston and Mornington Peninsula Councils to introduce such measures as an annual registration fee.

Other metropolitan councils including City of Port Phillip and City of Yarra are also currently investigating options to deal with short-stays.

Deputy Lord Mayor and the council’s planning portfolio chair Cr Nicholas Reece said compared with other Australian cities, the proposed changes represented a “light touch approach” and that there was “ample capacity” in the city’s hotels.

“I will also just highlight the fact of there being more than 10,000 new hotel rooms that have come online in the last few years. We’ve got 1200 under construction and so there is ample capacity in our hotel industry for welcoming thousands and thousands of new tourists,” he said.

“So, it’s not the beginning of the journey, but it’s an important next step.”

President of local residents’ group Southbank3006 David Hamilton told Southbank News that while it was in full support of the initiatives proposed by the council, he said it was “disappointing” that it had “taken a housing crisis to get this issue back on the agenda for reform” when “the impact on residents’ lives has been an ongoing issue for years”.

“Based on the information published by the council, a short-term industrial scale operator with 50 properties in Southbank arbitraging the rental market by entering into a 12-month lease and then subleasing the same property for short-term rentals could be making a gross profit of $22.5k per week based on current rents in Southbank,” Mr Hamilton said.

“This is driving up rents for others, leaving many struggling to find accommodation close to where they work, and reportedly leading to overcrowding in smaller apartments with the number of residents exceeding the design and occupancy certificates.”

This is not entrepreneurship and the new economy we want in Southbank. This is lazy opportunism exploiting regulatory flaws.

Mr Hamilton called on the Victorian Government to support the council’s initiatives by committing to a review of current short-stay regulations, and strengthening owners’ corporation powers to limit stays to a minimum of 90 days.

Senior director government and corporate affairs at accommodation platform Stayz Eacham Curry said the move by the council would “only limit accommodation options for tourists and income for mum and dad retirees”.

Senior director government and corporate affairs at accommodation platform Stayz Eacham Curry.

“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,” he said.

“Stayz supports fit-for-purpose regulation of the short-term rental sector. 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.”

As reported by Southbank News in August, the state government is currently considering a $5 tourism levy on short-stay accommodation, but the Victorian Tourism Industry Council (VTIC) and some local business groups have argued the proposal would be a major impediment to the sector’s post-pandemic recovery, while doing little to solve the housing crisis.

Speaking at the council meeting on August 29, Cr Rohan Leppert said while the government’s proposed “tourism tax” was “shorthand” for generating revenue from the short-stay accommodation, he hoped the council’s initiative could help “unlock some doors at Spring St”.

“Other cities around the world don’t have that dearth of regulation, and they know the difference between a short-stay and a long-stay apartment,” Cr Leppert said.

“Wouldn’t it be a good thing if after we signal our own intention to enter this space, that the council and the state can partner on how we can ensure that as government generally enters regulating this space, it does so in a way that both levels of government are completely aware of, and are complementing the work that each other is doing?”

“I also hope that we can unlock some doors at Spring St and figure out how regulating this space across two levels of government works efficiently, not just in the interests of government, but above all, in the interest of the public.” •

For more information: participate.melbourne.vic.gov.au/short-term-accommodation