Short Stay Levy Bill 2024- will it drive short stays out apartment complexes?

The Victorian Government is considering passing legislation that aims to tackle the impact that short term letting has had on the long term residential tenancy market.

The aim of the bill is ultimately to entice owners to stop leasing out their properties on platforms like AirBnb or for short terms tenancies only.

The bill also makes amendments to the Owners Corporation Act 2006 in relation to the powers of an owners corporation to prohibit the use of lots as short stay accommodation.

In an attempt to make short term letting less profitable, the government is looking to impose a 7.5% levy of the total booking fee for a short stay in short stay accommodation. Whether this levy will dis encourage short term operators will come down to a commercial consideration- will I be paying more in paying this levy than I would be in complying with all the requirements under a residential tenancy agreement? Likely, the answer will be no, particularly given that the levy will be passed on to the short term occupiers whilst the cost of yearly smoke alarm checks, electrical and gas checks etc, maintenance and repairs that can be demanded by a long term tenant are paid by the landlord and not always foreseeable and therefore not budgeted for in a yearly rental fee. Furthermore, the practical convenience of not having to worry about getting rid of a tenant under a residential tenancy agreement and the freedom that provides the landlord.

The key amendments to the Owners Corporation Act include:-

a. Deletion of the reference to maximum of 7 days and 6 nights and simplified to continuous period of less than 28 days;

b. Ability to prohibit the use of lots as short stay accommodation but only where that lot is an investment property and not the principal place of residence of the lot owner.

The bill proposes the right for owners corporations to pass a rule prohibiting an investment property lot from being used as short stay accommodation. This is certainly a welcomed addition however with any rule of an owners corporation, it will be up to the VCAT to determine whether it can be enforced. In light of the fact that Division 1A of the Owners Corporation Act has not been repealed, it is questionable whether an owners corporation right to prohibit short term letting will be narrowed down (as was done with the question of pets) to situations where there is ongoing nuisance caused to other lots and the common property.

The bill is only in draft format and therefore we need to wait and see the final wording of the bill and the discussion in Parliament to understand its operation.

The conclusion is, don't get too excited in thinking that this bill will bring about the end of short stay in apartment complexes.