Victorian ‘Airbnb tax’ misjudges landlords, experts say
Experts believe the proposed levy will be a negative for both property owners and renters.
The Victorian government’s introduction of a 7.5 per cent levy on short-term accommodation platforms such as Airbnb and Stayz will likely be passed from landlords to consumers without easing the rental crisis, according to tax experts.
They said the levy might make operating short-term rentals more expensive for landlords, but it would not necessarily lead to marked increases in the rental market.
The levy was part of the government’s Housing Statement, unveiled on Wednesday, which detailed a 10-year plan to improve housing affordability and build 800,000 homes.
“This levy makes the purchase of short-stay accommodation properties less attractive,” he said. “As a result of the levy, the yield received by the property owner is reduced immediately and other costs such as interest rates are not being lowered for the investor to offset the levy.”
“Because this levy is only on short-term accommodation, it's making longer-term rentals seem slightly more appealing … but at the same time, most investors are in it for the longer term. So, they'll outride that downturn.”
Property Tax Solution’s Michael Armstrong disagreed with the levy’s policy rationale and said investor behaviour might fail to align with the government’s expectations. The government, he said, might “ironically” cover part of the levy’s costs if landlords deduct on-charges against their assessable income.
“The levy may not necessarily achieve the objectives that the government wants,” he said. “I don't necessarily think it's going to move the short-term tenancies into the long-term ones.”
“The first thing most of my clients will be asking is: Can I pass on the cost to the consumer? And then if I can't, is this investment still worth keeping?”
“An investor is purely looking to maximise the return on investment, and even if the cost of the tax can't be passed on to the end consumer, if that return on investment from an Airbnb is still much more attractive than putting it into the long-term market, then they'll keep the Airbnb.”
According to data-tracking website Inside Airbnb, Melbourne has over 23,000 listings that average a price of $231 per night. The proposed levy would increase that by $17 per night.
Mr Armstrong said the effects of the levy might be comparable to Victoria’s land tax, which introduced a new flat rate tax of $975 and imposed an additional levy on investment properties in May.
“All it ends up doing is just increasing the cost of the supply of that asset. I think we're seeing that at the moment with rental increases just in the general market,” he said.
With the Victorian levy set to come into effect on 1 January next year, NSW Premier Chris Minns said his government would be open to adopting similar measures and would study the impact of Victoria’s tax.
“Short-term leasing, and its effect on the community [and] renters in NSW, has been pretty extreme,” Mr Minns said, as reported by The Guardian yesterday.
The Victorian government’s Housing Statement came as the latest ASIC figures show construction insolvencies up 41 per cent this financial year compared to last.
About the author
