Feeling the full force of the Airbnb market

April 2023

The extraordinary rise of Airbnb worldwide and its impact has only been fully realised, the complexities of which have little chance of being resolved, unless state or local governments are prepared to regulate the industry.

But regulation is difficult to enforce, resource-intensive and may involve lengthy legal processes.

The Peninsula, for one, has a problem with the Airbnb market.

And while governments are struggling to fill the shortfall of housing across the country, Airbnbs have found themselves in the firing line.

Since the inception of the Airbnb platform, primary-home owners, second homeowners and property investors have discovered a ready market for holiday accommodation on the Peninsula that brings in a tidy income.

Ultimately, it’s a question of whether a fair and equitable balance can be achieved where it is the right of property owners to have the use of their own property for their own benefit, either by personal use and enjoyment, or commercial activity.

It remains to be seen if Victorian authorities have the mettle to control the affect the short-term rental boom is having on long-term rental markets and housing availability.

In areas where clusters of Airbnbs have been accused of causing a housing shortage, council and state governments across Australia are now beginning to take action.

This is evident in popular tourist regions such as Byron Bay, Noosa and Margaret River where councils have been given greater powers to regulate the market.

Capping the number of days properties can be booked each year is one way of doing this. Other measures may include a tourist tax, higher stamp duty, a licensing scheme, zoning laws, planning permits and higher council rates.

The NSW State Government has a 180-day short-stay cap in Sydney. Regional areas can apply to impose the same condition. Byron Bay has a 180-day cap for now, however, plans are underway to have this halved.

In early 2022, Noosa’s local council brought in new local laws to control its 5000 short-term holiday lets. Operators are now subject to a strict code, a ‘Transitory Rating Category’, where higher rates are set to a tiered system of usage. West Australia has proposed a 60-day cap without planning approval. Beyond that, planning approval is required. In the Margaret River region, short-stay owners need to renew their permit annually.

So where does Victoria sit at the moment?

Calls to the Victorian State Government to have Airbnbs regulated in some shape or form appears to have fallen on deaf ears.

In February 2023, the Victorian Greens put up a proposal to have mandatory public registers for all short-rental operators, with a 90-day cap each year.

Since the launch of Aribnb in Australia 10 years ago, an ABC News feed in May 2022 reported a figure of approximately 100,000 Airbnbs across Australia. About 85% of those are entire houses.

According to the inside airbnb.com database, the Mornington Peninsula Shire had a staggering 5000 listings in 2022, up from 4000 the previous year, figures which don’t include other platforms such as Stayz and Booking.com.

Community frustration is now beginning to surface over the lack of long-term stock. What would normally be available for lease has been switched to short-term. Social welfare agencies are also finding it more difficult to secure accommodation for those in dire need.

The range of Airbnbs vary from single rooms to entire houses, small beach shacks to the more glamorous houses with impressive pool and outdoor living areas large enough to accommodate multiple families on holiday. Then there are the on-site landlords who holiday-let the lower half of their home or covert the garage into a self-contained flat - no planning permit required.

On the Southern Peninsula where tourism relies heavily on a ready workforce to service visitors descending upon the Peninsula throughout the year, affordable leases are critical. When this dries up, a potential workforce moves away.

This then creates critical staff shortages.

The Federal Government’s commitment to fixing the housing shortage will not happen overnight. Even if the magic wand could be waved to open up land for public housing, the Southern Peninsula has limited opportunities for expansion.

Planning Scheme frameworks are such that a myriad of zones and overlays protecting Green Wedge areas, significant coastal areas and seaside and rural villages, prevent new housing estates from being developed.

The Mornington Peninsula Shire has already brought in new local laws to reduce the impact some Airbnbs have had on neighbourhood amenity, and this in part has had some success in controlling bad behaviour of tennants who just want to party.

Certainly the Victorian State Government’s “hands off” attitude to the Airbnb market suggests it will do nothing by nuisance and amenity regulation which would impact on its ability to levy State Land Tax on such commercial use.