Melbourne Makes Significant Decision On Airbnb Amid Housing Crisis

The Melbourne City Council has made a significant decision to introduce a cap on the number of days per year that properties can operate as short-term rentals, such as those listed on Airbnb.

Starting February, the new regulations will require property owners to pay an annual registration fee and adhere to a maximum number of rental days per year. The exact fee amount and the specific day limit are yet to be finalized.

"Currently, the proposed limit is 180 days, which is quite generous," Melbourne Lord Mayor Sally Capp stated in an interview with 3AW host Neil Mitchell on Wednesday. "It's the same as Sydney. It's far more generous than San Francisco, which limits short-term rentals to 30 days."

A consultation process will be conducted to finalize the details of Melbourne’s new rules.

Ms. Capp emphasized that the primary goal of this decision is to convert short-term rentals into long-term housing options for residents.

Mitchell remarked that it was a significant step to dictate how property owners can use their properties.

Ms. Capp responded, "We haven’t taken this decision lightly. Intervening in private property rights is a big deal, and that's why the consultation process is crucial."

She emphasized the desire for property owners "to be the heroes" in addressing the housing crisis.

Ms. Capp also noted that while this isn't the only initiative aimed at increasing housing supply, it is the quickest way to create more long-term housing.

According to the council, 14 percent of Melbourne’s residential properties (about 4,100 units) are actively used as short-term rentals, with almost half rented out for 90 days or more each year.

Currently, the rental vacancy rate in the City of Melbourne is around 0.8 percent.

Michael Crosby, head of public policy at Airbnb Australia, claimed the council report appeared to “exaggerate” the percentage of short-term rentals at 14 percent, suggesting the actual number is likely less than four percent.

The council based its data on analytics from the platform AirDNA.

Crosby explained that a “whole home” listed on Airbnb might be someone’s primary residence, rented out while the owner is traveling for work or holidays to offset rising living costs.

Crosby expressed that Airbnb advocates for statewide frameworks rather than a fragmented, council-by-council approach.

“The Victorian Government is best positioned to manage the sector, rather than having 79 Local Government Areas across Victoria each developing their own regulations,” he stated.

“Late last year, Airbnb proposed several measures, including statewide registration schemes, codes of conduct for every state and territory, and support for a tourism levy.”

He emphasized that statewide registration and data sharing would provide the Victorian Government with a clear overview of the short-term rental industry, enabling data-driven, evidence-based policy decisions. This approach is already in place in New South Wales and Tasmania.

Crosby also warned that capping the number of rental days per year could limit affordable accommodation options for traveling families.

News.com.au notes that in Victoria, 84 percent of Airbnb host accounts have only one entire home listing.

Furthermore, the Australian Financial Review reported in July 2023 that New South Wales’ rules limiting short-term rentals to 180 days a year had not been enforced once in nearly two years of operation.

According to the outlet, the NSW Office of Fair Trading received more than 550 complaints, yet none led to penalties.

Byron Shire mayor Michael Lyon criticized the 180-day cap as "ineffective."

"It achieves nothing and was never intended to," he remarked. "It was merely a token gesture to appease those concerned about the shortage of residential housing."