Airbnb crackdown in full swing but varies widely between states

Property investors seeking supercharged returns from short-term rentals are facing a new round of headwinds, with new laws kicking off in Victoria and Western Australia on 1 January. 

After years of stuttering starts, and at times hollow threats, the ‘Airbnb’ clampdown is in full swing, with many Australian states — and increasingly local councils — getting serious about policing the shot-term rental accommodation sector. 

But the impact depends on where the property is located and appetite of authorities for enforcement. 

As the first state to regulate the sector, NSW in 2018 introduced a cap on Airbnb-style letting in greater Sydney to 180 days a year. 

Yet between 2021, when the laws was expanded to a number of coastal and regional areas, and June last year the government had not issued a single penalty — a state of play that experts say remains largely unchanged. 

But 1,000km to the north, in the sunny tourist enclave of Noosa, you can expect a tap on the shoulder if you’re bending the rules in regards to short term rental accommodation (STRA). 

There, responding to community concerns and to tackle the “exponential growth of short stay accommodation”, the Noosa City Council requires all providers to register a $360 fee for a unit and $1,067 for a house, and pay annual fees of $200 and $500 respectively. 

And it is not only busy issuing fines for non-compliance, but it publishes the data quarterly. 

Victoria is going through a pretty big overhaul, probably worse than anywhere else in Australia.

- Steve Yarwood, Let Go

Between February 2022, when the laws were introduced, and 30 September 2,745 dwellings were registered for short stay. 

In that time the council has issued 290 compliance notices and doled out 134 infringements. The penalty is five penalty units, or just over $800. 

Ethan Brown, General Manager APAC at Hospitable, which provides short-term accommodation IT across the globe, said the implementation of short-term rental laws in Australia had seen “a patchwork of approaches”. 

“Although it might seem that Australia is playing catch-up in implementing short-term rental regulations compared to regions where frameworks have been in place for years, the reality is more complex,” Mr Brown told API Magazine. 

“Some areas in Australia have been slower to adopt regulations but others implemented them long ago, showcasing a patchwork of approaches. 

“This reflects not only the unique characteristics of Australia’s diverse market but also the decentralised nature of its governance, with states and local councils crafting laws tailored to their specific needs,” he said.

Two states making major STRA moves

Western Australia and Victoria are leading the latest wave of regulations. 

Notably, they are involving host providers such as Airbnb and Stayz in their approach. 

In Western Australia, from 1 January, short-term rentals in metropolitan regions must be registered if they are leased more 90-days a year or more. 

In that case, owners are required to obtain a “change of use” planning approval and then list properties on the state’s STRA Register (doing so is free until 1 December). 

Steve Yarwood, Director of Perth’s Let Go that specialises in short-term rental property management, said from 1 January properties listed for short-term stays needed to be registered. 

Those hosting more than 90 days a year also need to obtain a development approval. 

“From the start of 2025 you need to be displaying a STRA registration number on any online or any other listings, and that cross references with the state government,” Mr Yarwood said. 

“There’s a communication between the online platforms, like Airbnb and Booking.com, and they record how many nights you’re hosting. 

“It all gets tallied up and then as you approach your 90 nights the state government will — this is what they tell us is going to happen — reach out to the agent or the owner. 

“They’ll say ‘you’re approaching your 90 nights, please ensure you’ve got council approval and put that DA number in your listing, otherwise you’re no longer allowed to operate,’” Mr Yarwood said. 

The Victorian Government is also working closely with the major short-stay platforms as it launches what are seen to be the most restrictive laws of any state. 

From 1 January, a state government levy of 7.5 per cent will apply to all short-term stays, which includes the cost of the stay, GST and any cleaning fees. 

Booking platforms are required to register with the Victorian Government and pay it the collected booking fees quarterly. 

Landlords not using booking platforms are also required register with the government and transfer the collected fees annually, or quarterly if they collect more than $75,000 in booking fees a year. 

“Victoria is going through a pretty big overhaul, probably worse than anywhere else in Australia at the moment,” Mr Yarwood said. 

When asked whether Western Australia’s new laws were “overall a positive”, he was diplomatic: “They’re definitely not as negative as we expected”. 

“We do agree with regulation in some sense and there is a lot of onus put on the booking platforms to make sure they comply and make sure the listings are displayed,” Mr Yarwood said. 

“So I think it’s actually turned out better than we expected”. 

Hoteliers happy with tightened regulations

The hotel lobby, led by the Australian Hotels Association, had lobbied hard to increase regulations on short-term stays. 

“Their interests were to get rid of the competition in a way,” Mr Yarwood said. 

But there had been an overwhelming response from the public, he said. 

“Especially from ‘Mum and Dad’ hosts who are saying ‘if you were to significantly penalise the industry it’s going to put a lot of people out of jobs’,” he said. 

“It does deliver a pretty huge economic stimulus, the short-term rental sector.” 

Mr Yarwood, who provided input regarding the new laws, said many in the industry were watching the NSW market. 

He said NSW Government “came in seemingly pretty heavy-handed” but “despite probably a lot of breaches” it appeared the laws weren’t being enforced. 

Gabriel Sarajinsky, managing director of Sydney-based HomeHost, which also specialises in managing short-term rentals, said NSW’s 180-day cap tended to be “a bit of a grey area”. 

He said a hybrid model — where properties are placed the longer-term rental market for six months a year — was appealing for some investors. 

“Ultimately anyone that’s sort of risk-averse, the idea is to do the 180 days and then flip it into a hybrid model where you’re doing six-month residential tenancy agreement,” Mr Sarajinsky told API Magazine. 

“There hasn’t really been too much in the way of repercussions for going over that 180 days at this stage. 

“But I’m sure they’ll catch on at some point,” he said.