The Victorian Government has announced plans to introduce a 7.5% levy on short stay rentals on total revenue raised through online accommodation platforms to apply from 1 January 2025.

Short stay accommodation refers to apartments, houses and rooms rented through online providers, such as Airbnb and Stayz.

The Victorian Government estimates there are more than 36,000 short stay properties in Victoria, with more than 29,000 of those properties being houses.

The estimate for Hepburn Shire is approximately 1,900 properties with the bulk in the Daylesford area.

The Parliamentary Budget Office (PBO) anticipates the levy will raise $75 million annually. The treasurer has indicated that 25% of the levy funds will be returned to regional areas to support affordable housing initiatives.  However, it is clear that there is no guarantee that Hepburn Shire will receive any of this funding.  The State Labor Government has previously indicated that Hepburn Shire is NOT a focus for affordable housing.

The PBO acknowledges that there are assumptions in the underlying data in the report that may be inaccurate and that revenue estimates are therefore uncertain.

The Mayor, Cr Brian Hood, told ABC radio that council officers estimate the levy will raise $10 million per year in Hepburn Shire once the levy is fully operational. Independent calculations by The Wombat Post substantiate Council’s estimate.

On average, the short term stay (STS) levy on a property in Hepburn Shire would be $5263 per year based on an average annual booking revenue per property of $70,145.

These estimates vary significant from the PBO state projection of an average annual booking revenue per property of $27,778 and an average annual short stay levy payable per property of $2,083.

A number of local investors were contacted for comment. They made the following observations:

  • The actual net revenue for a property is a small percentage of the headline initial booking revenue, with direct costs including booking agency fees (Airbnb, Stayz, etc), management fees, cleaning and laundry typically halving the revenue to the owner. From this the owner must pay property costs including insurance, rates, utilities, and land tax.
  • This impost is in addition to increases in Land Tax, the introduction of the VRLT, and general increases in property expenses.
  • Self-funded retirees and long term investors have had “not only the goal posts moved but had a rewrite of the game rules”.
  • Although many investors were considering selling (into a locally depressed market). None saw a transition to permanent rentals as viable for their specialised properties.
  • All expected to try and pass on the increase and many expected reduced demand as a result.
  • A significant reduction in visitation will flow onto the local hospitality industry including accommodation services such as cleaning, maintenance and associated services.

The additional costs for owners of short stay accommodation of both the VRLT and the STS may shift some properties onto the long-term rental market but are also likely to cause many owners to sell. Property sales are unlikely to increase the stock of affordable housing as most would be higher end properties.

Cr Hood, on ABC radio, sought a stronger commitment by the State Labor Government to return levy revenue to areas from which is originated.

If Hepburn received at least 25% of the levy collected ($2.5 million) to be used for affordable housing and/or community amenities, it would be transformational.