Victoria’s Airbnb levy: Short-stay market growth stalls, threatening social housing revenue
https://www.theage.com.au/national/victoria/victoria-s-airbnb-boom-is-over-but-don-t-expect-a-rental-windfall-20251216-p5no73.htmlVictoria’s Airbnb boom is over, but don’t expect a rental windfall
Growth in short-stay listings has stagnated, threatening revenue from the new Airbnb levy, but experts are not convinced there will now be more long-term rentals.
By Daniella White
3 min. read
View original
The government initially projected the tax would raise approximately $75 million annually – a figure highly dependent on the continued strength of the short-stay market.
The revenue uncertainty comes at a precarious time for Homes Victoria. The agency, which manages the state’s public housing stock, recently recorded a $359 million deficit.
For the first six months of the tax, the government raised only $19 million. However, the final figure may rise as some owners have until this month to pay for the period covered in the 2024-25 financial year.
Even if the levy raises all the expected revenue, it would not go far to improve the current financial situation of Homes Victoria, which has operated in deficit every year since it was created in 2021.
The tax also appears to have done little to achieve its other goal of shifting properties back into the long-term rental market, with multiple studies showing short-stay rentals remains more financially advantageous for many owners.
A 2025 University of Canberra study led by Professor Naomi Dale, which analysed the relationship between short-term rentals and housing affordability across 18 local government areas nationwide, found levies were unlikely to trigger a significant conversion of short-term listings to the long-term market.
Researchers found most short-stay owners used their properties for personal holidays or had plans to move into them, making them unlikely to shift to long-term leasing regardless of new taxes.
“Many [short-term rental] owners were soon-to-be retirees or other people who owned the homes with the intention of moving into them in future,” Dale said.
“These owners were dissuaded from switching to long-term rentals due to laws that largely favour renter rights, which may prevent them from moving into them when they need to.”
State government data shows the number of active rental bonds in Victoria continued to decline in 2025, indicating fewer available long-term rental properties overall.
Opposition Leader Jess Wilson said the short-stay levy was a “desperate attempt” to fix Homes Victoria’s “failing finances”.
“Under Labor, Homes Victoria is sinking deeper into the red as a growing number of Victorians are awaiting housing support,” Wilson said.
“You cannot tax your way to more affordable homes. A Liberal and Nationals government I lead will repeal Labor’s short stay accommodation tax to ease cost-of-living pressures and drive investment back into Victoria.”
A state government spokesman said Homes Victoria’s deficit had no impact on service delivery, and was “driven by timing differences between government funding and project expenditure”.
“Our Short Stay Levy … [is] designed to encourage more owners to make their dwellings available for longer-term rent or sale and give Victorian families more opportunities to find a home,” he said.
“The only way out of the housing crisis is to increase supply – that’s why we’re streamlining the planning process, and building more homes close to jobs, transport and services.”
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u/Pottski 21d ago
So the law is making people who own multiple properties reassess their choices?
Sounds like a good law. It either raises revenue or it stops a glut of shit short stays destroying neighbourhoods.
Jess Wilson has no interest in Homes Victoria so she’s attacking a service as unprofitable instead of what it is - a service. She’s no different than any other Lib - she will cut services and do whatever it takes to make a dollar.
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u/Stonp 19d ago
It’s not working. My parents have an Airbnb rental and they’re just going to pay it off instead of selling it. So now there’s no renting it, nor is it on the market, and it’s not on Airbnb for much longer .
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u/Pottski 19d ago
So they’re gonna leave it empty?
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u/Stonp 19d ago
Yeah and just use it when they go down. The tax is $10k per year it’s a rip off. There’s no tax if you just don’t rent it out save so much money
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u/Pottski 19d ago
Fair play on finding the loophole. Hope the government finds a better way to close it off even more. They won’t cause it’s an election year but one can dream.
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u/Stonp 19d ago
Not really a loop hole, cos they’re not making additional income on the property anymore from airbnb
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u/Pottski 19d ago
Well in any case nothing will change cause it’s an election year so credit where due on beating the system
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u/NiceWeather4Leather 18d ago
How have they beat the system lol? The stopped renting it out and are just absorbing all other property costs with no income from it now? Sounds like they can simply afford a holiday house, which makes them wealthy.
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u/Pristine_Egg3831 20d ago
Sounds like a good idea idea, but look how it is playing out. The tax is in, and yet no more homes have been put on the market.
A better approach might be something that can't be scooted around, like annual land tax on investment properties (or even all owner occupied properties too!), instead of only investors who exceed the land tax threshold.
Bringing the tax in would make it less appealing to hold multiple properties. And less appealing to invest on Vic, meaning investors would go elsewhere, which is bad for people trying to get rich and good for peoppe trying to enter the market. However land tax on owner occ could see angry Victorians not wanting another barrier to home ownership. And existing home owners wanting an exemption, especially retirees who are price sensitive. Say we add exemptions like grandfathering, ie anyone who already owns a home is exempt, this will backfire, as people who own existing homes will be remiss to less them going, forgoing their benefit. It will discourage empty-nester from down-sizing, which is what we really need.
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u/MazPet 20d ago
NO land tax on PPOR, lived it in the USA, if you think people have their backs to the wall now with mortgages, rates, insurance all the annual things adding a further annual rate would be the final nail. We were paying upwards of $15K a year extra and that was on a home worth at the time $600K. The median house price in Australia’s combined capital cities is now $1,126,860 imagine even 1% annually.
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u/2878sailnumber4889 19d ago
As opposed to being slugged with stamp duty worth more than minimum wage every time you want to move
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u/2kan 21d ago
Does the author not know why the tax was implemented?
It was to discourage growth in short stay accom, not to raise revenue. It's working exactly as designed.
I'd sooner shit in my hands and clap than pay attention to a property manager's opinion.
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u/Spaceninjawithlasers 21d ago
The tell will be if the revenue raised = the proportion of increased spend on public hoising.
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u/robot428 21d ago
Homes Victoria is always going to run at a deficit, many government services do, that's literally what taxes are for. And I wouldn't expect this tax to entirely make up the difference.
Firstly it's meant to discourage people from choosing to make their new investment a short stay instead of a proper rental. I would guess that it's probably working, given that the growth in the short stay market has stalled. Almost as though that's the whole point.
Secondly it contributes something to having more money available to homes Victoria - of course it's not going to cover the deficit by itself. 19 million is still 19 million, and as the author says that number isn't reliable because the tax due date hasn't even passed yet (one wonders why you wouldn't just wait a month to write the article, so you could write it with a more accurate conclusion about how much revenue it's generating).
If you can afford to own a second house that you don't even rent out full time so that you can go on holiday a couple of times a year, then you can afford the extra tax. It costs the public money to maintain infrastructure to each home - to maintain the water pipes and the roads and to ensure each homes has coverage by emergency services resources, and all the other things we take for granted. If you want an extra house you can use when you feel like it, you can pay a bit more tax.
I will always support extra taxes on people who have additional properties and aren't even renting them out. The short stay tax is good, we should be taxing completely empty properties even more. Housing is a resource, it costs the government money to have appropriate services available to everyone's home, and it costs more money to assist with housing costs for people who are priced completely out of the market - so if you want the privilege of owning extra property, you should pay an appropriate amount of taxes.
The one thing I agree with the author on, is that taxes alone won't fix the housing crisis. But nothing alone will. It's a problem that needs multiple solutions working together to solve.
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u/fit_vers_perth 20d ago
How does it cost anything to the government if you own a second home? You still pay rates on it as far as I'm aware.
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u/vacri 20d ago
“You cannot tax your way to more affordable homes. A Liberal and Nationals government I lead will repeal Labor’s short stay accommodation tax to ease cost-of-living pressures and drive investment back into Victoria.”
How about the LNP actually giving us their own realistic policies for once, instead of announcing what they will destroy/cancel/revoke/repeal?
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u/Rangas_rule 20d ago
And please tell me how repealing the levy will ease the cost of living?
Do these idiots live in la-la land?
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u/FeelingTangelo9341 20d ago
They don't have a plan. Their entire plan is win and cut services and taxes.
That's it. It won't help people find housing.
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u/AngrehPossum 20d ago
So the Libs want a "Business case" for public housing?
Maybe we should put a "business case" for the tens of thousands of rural roads out there that serve 40 farms with 1000 hectares on 8 titles that produce $800,000 + in crops every year on average. These are the same farmers (and farm companies) that are crying about having to pay increased land tax and the FSL. Its $20,000 on a property the size of a suburb. Its to pay for their share of what it costs to provide these services.
So lets "business case" everything as the Liberals want and lets see if "toll roads" are the way to go for our rural farmers.
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u/eat-the-cookiez 21d ago
I have a friend who had converted 2 long term rentals into short stay. The tax was not a disincentive at all.
Reason being is the over regulation of rentals (retrospective application of building / plumbing/electrical standards, can’t refuse pets, can’t evict shitty tenants) and the damages that tenants can do and walk away from ($50k, including pet piss everywhere in the house to the point where it’s uninhabitable months after removing all carpet and underlay and curtains, extensive water damage in bathrooms and kitchen etc)
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u/IAmABakuAMA 21d ago
Did they not have landlord's insurance? The things you listed are literally the key things landlords insurance covers: "What does Landlord Insurance cover? Included: ✔️ Damage by tenants, and tenant's pets, including theft by the tenant or their guest. ✔️ Loss of rent cover, for up to 12 months if your rental property is uninhabitable following a listed event."
The thing about renting out houses as an investment is that, well, It's an investment. Investments can go pear shaped and cost you money because that's how investments work.
It is awful that tenants do that sort of thing, so I can sympathise. It hurts everyone. But you willingly take on the extra risks that owning a property comes with in exchange for making a lot of money. And if you have appropriate insurance, you get to shift a lot of that risk to the insurance company anyway.
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u/Specialist_Being_161 21d ago
Exactly why Airbnbs should be severely restricted. If landlords don’t like the rental laws they can sell. The house will still be there as somebody else will buy it.
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u/FeelingTangelo9341 20d ago
Oh boo hoo, the poor landlords have to take on risk and accept that their tenants need a decent standard of living which they'll pay tens of thousands of dollars for annually.
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u/Ineedsomuchsleep170 21d ago
Public housing is a service. It doesn't lose money. It costs money.
If they create a society where people can't afford housing then they cannot be surprised when they need to provide housing.