Victoria unveils Airbnb tax in plan to build 800,000 new homes

September 25, 2023

Short stay rental properties in Victoria will be hit with a 7.5% tax as part of a raft of housing changes announced by the state government to unlock housing supply.  

After months of speculation, Victorian Premier Daniel Andrews on Wednesday confirmed it will implement a short stay accommodation levy – the first in the country – as part of its much-anticipated ‘Housing Statement’ package of housing reforms.

Government estimates show there are currently more than 36,000 short-stay accommodation places across the state on platforms like Airbnb and Stayz, with almost half in regional areas.


Victorian Premier Daniel Andrews has confirmed short-term accomodation will be hit with a levy. Picture: Luis Enrique Ascui

The government argued that homes on short-term accommodation platforms couldn’t be rented out on longer-term leases amid the country’s rental crisis.

It says revenue raised from the levy will go to Homes Victoria to build and maintain social and affordable housing across the state, including 25% for regional areas.

The levy has been slammed by the state opposition, who said it will add $100 to the cost of a weekend away in Victoria.

Proptrack senior economist Paul Ryan said the levy was designed to reduce the competitiveness of short-term stay accommodation, and will likely push a marginal number of property owners to either rent their homes out on longer-term leases, or sell up.

“It isn’t a silver bullet to the housing supply issues… but it will raise revenue to build more social housing, so it may have an impact in a secondary way by providing more funding to increase housing supply,” Mr Ryan said.

Plan to build 800,000 new homes

In the statement, the Victorian government set a target to build 800,000 new homes across the state over the next 10 years to accommodate Victoria’s booming population.

Victoria’s population is on track to reach 10.3 million by 2051, meaning the state will need 2.24 million new homes by then.

The government estimates that Victoria is set to build about 540,000 homes over the next decade and will need to build about 260,000 extra homes to hit its target.

Premier Andrews said the status quo is not an option.

“Whether you’re buying your first place, upsizing or downsizing as life changes, or renting – the work we’re doing will mean there’ll be a place you can afford, and that you can call home,” he said.

To deliver the 80,000 new homes per year, the Andrews government plans to speed up the planning system, accelerate the rollout of new social and affordable homes, strengthen renters’ rights and unlock new areas for developers to build more homes.

Under the plan, the government will make it easier for homeowners to build a granny flat on their property, removing the need for a planning permit if the property is less than 60 square metres.

A dedicated team will work to clear a backlog of 1,400 housing permit applications that have been stuck with councils for more than six months.

And the planning process will be streamlined for medium- to high-density residential developments that are worth at least $50 million in Melbourne, or $15 million in regional Victoria and deliver at least 10% affordable housing.


The Victorian government wants to build 800,000 new homes across the state over the next decade. Picture: Getty

It will introduce clear planning controls to deliver an additional 60,000 homes around 10 activity centres across Melbourne, including Chadstone, Frankston, Niddrie, Preston and Ringwood.

The government will also streamline the permit and planning assessment pathways to give builders, buyers and renovators more certainty about how long approvals will take.

45 government-owned sites will be rezoned to deliver about 9,000 homes across the state, with a target of 10% of affordable homes to be built across the sites.

Some 769 social housing dwellings will be built through the federal government’s Social Housing Accelerator on top of 12,000 homes from the Big Housing Build and more than 4,000 from other programs.

To support renters, the government will also extend laws around rental bidding. In 2021 real estate agents and landlords were banned from encouraging higher offers than the advertised price, but now it will become illegal to accept bids.

It will also establish a rental dispute organisation, introducing a portable rental bond scheme and other initiatives.

Housing statement draws mixed reaction

The housing statement has received mixed responses, with some property groups welcoming the plan while others have criticised its social housing initiatives.

Council to Homeless Persons chief executive officer Deborah Di Natale said the package fell short on social housing commitments.

“Behind the big headline numbers, there’s crumbs for social housing,” Ms Di Natale said.

“We need at least 60,000 new public and community homes to be built in Victoria over a decade. Unfortunately there’s nothing like that in these announcements.”

Property Council Victorian executive director Cath Evans said the Housing Statement was a positive step for Victoria that provided a clear policy pathway for the delivery of much needed housing for Victorians.

“This ambitious and comprehensive plan will enable our industry to activate all types of housing, providing choice to Victorians while also enabling delivery of the volume of new dwellings that the market needs in order to address the affordability crisis,” Ms Evans said.

Victoria’s housing changes come after the NSW government announced a package of housing initiatives in its state budget yesterday.

They follow last month’s National Cabinet plans to build 1.2 million new homes across Australia over five years.

Federal, state and territory leaders agreed to build an extra 200,000 homes on top of the 1 million home target set out in last year’s National Housing Accord.

The federal government promised $3 billion in new funding incentives for the states and territories that built more than their share of the new homes.


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