With an Airbnb tax planned in Victoria and a 60-night cap approved in NSW, the free rein for STHLs is clearly coming to an end, with hidden benefits for everyone and not just those who actually live in strata.
It wasn’t quite the biggest bombshell from Victorian Premier Daniel Andrews last week, but his flagging of plans to introduce a 7.5 per cent tax on short-term holiday rentals (STHLs) sent a sizable shockwave through the tourism industry.
With hints that NSW may go down the same road, added to the state government’s endorsement of Byron Bay council’s 60-night limit on holiday lets, the days of open slather for STHLs are clearly over.
The dire warnings of job losses and tourist turn-off resulting from the Victorian tax have been predictable, and viewers of Q&A on the ABC on Monday night would have seen how confused and confusing the arguments can be.
Amid a welter of non-sequiturs and whataboutisms, we heard that this tax would force hosts to give up their properties, harming the tourist industry.
Or they wouldn’t have to pull out, so there would be no benefit to housing because the revenue raised – estimated at $75 million – would make little difference to the housing shortage.
What about the “Mum and Dad” investors who depend on tourist dollars to fund their retirement? What about the cleaners, keyholders and linen changers? What about the companies set up to manage them?
The instinctive response to the Airbnb apologists is the say, for God’s sake pick a lane and stay in it. You can’t use contradictory arguments to support your case … unless you deliberately want to confuse people and … oh, I get it now.
Meanwhile what about the people who bought and rented apartments in well-managed buildings only to discover that the very things that made them attractive as permanent homes would lure backpackers, bucks parties and away-day footy fans booking multiple units in the one block.
In short, we are being asked to consider tourists and people whose complaint is that they might not make as much money – not no money – ahead of the homeless, struggling residential renters, long-term investors and apartment residents.
Daniel Andrews’ response to a question about why this tax hadn’t come in previously provided a reality check: “Because we didn’t have 36,000 homes taken out of the rental market before.”
Holiday let levies may well spread. Some local councils are already raising rates significantly on STHL properties.
One rumour circulating at the Owners Corporation Network’s Strata Matters conference last week was that similar taxes are being considered in NSW. Maybe not 7.5 per cent, but a significant sting, nonetheless.
Is an STHL tax a bad thing? If its effect is as horrific as Airbnb, Stayz and their ilk warn, that could immediately put tens of thousands of homes back into the residential mix, and the effect would be almost instantaneous rather than waiting years for new blocks to be built.
For property investors who have switched to STHLs – especially those on tight margins – this could be a good time to flip back, while demand for tenancies is peaking, rents are rising and future rent rise caps are being mooted.
If you’re thinking of selling, you might want to be ahead of any wave of dumped holiday let properties.
For apartment owners and residents, including your tenants, whose lives have been disrupted over the past few years, the timing is optimal for a squeeze on STHLs in your blocks – including dobbing in hosts who may not have registered with the tax office.
Meanwhile the STHL lobby may want to tone down its warnings about potential job losses.
One of the cures for inflation, we are told, is higher unemployment. Thus, returning holiday lets to the residential rental market could help solve the housing crisis while at the same time contribute to curbing inflation.
Sounds like a win-win to me.
A version of this first appeared in the Australian Financial Review.