October 2024
The following paper sets out Anti-Poverty Network SA’s views on short-term rentals (e.g., Airbnb). It recommends that measures such as licensing, caps on the number of short-term rentals, and levys, be used to regulate the number of short-term rentals.
Since the 2000s, the international short-term rental accommodation (Airbnb) market has boomed. Concern has been expressed in many countries about the potential effects on the availability of longer-term rental housing. Cities that have restricted short-term renting include Amsterdam, Munich, New Orleans, San Francisco, London, Berlin, Los Angeles and Paris. Barcelona is in the process of banning it almost entirely.
In Australia, according to a recent study, the total number of short-term rental properties grew between March 2022 and March 2023 by no less than 22.8 per cent. The most dramatic effects have been in cities and towns that host large numbers of tourists. In these places, owners have transferred properties to the short-term market on a massive scale, reaping extraordinary returns.
In Victor Harbor, for example, the number of short-term rental properties was reported by a June 2024 study to be 28.6 per cent of the figure for long-term rentals. The shift by property-owners to the Airbnb model has made it impossible for many workers who need to live locally to find suitable accommodation.
In Australian capital cities, the impact of the boom in short-term rentals has been less extreme—but still enough to worsen the already dire problems faced by would-be renters.
Short-term rentals and Adelaide’s housing deficit
In Greater Adelaide, the number of entire dwellings let as short-term rentals has been calculated as 0.5 per cent of the total housing stock, corresponding to about 3000 houses and apartments. While this number may seem small, it is close to three times the city’s critically tiny figure for rental vacancies—as of August 2024, a mere 1,021.
Even if all the houses and apartments now used for short-term rentals in Adelaide were shifted to the long-term market, this would not raise vacancies to the level viewed as reasonably balanced—about 2 percent of total rental dwellings. Short-term rentals, it can be seen, are not the underlying cause of Australia’s housing crisis.
But there is no doubt that measures aimed at encouraging landlords to let properties on long-term leases can help relieve the pressures. Importantly, these measures can start having an effect immediately, without waiting for new dwellings to be permitted and built.
Steps to bring the market into balance
The popularity of short-term rentals shows they meet a genuine need. This is particularly true in tourist areas, where local economies depend on large amounts of accommodation being available during seasonal peaks.
But while short-term rentals have a place, there is a need for regulation to tune them closely to local conditions, which can differ widely. This situation argues for municipal councils to play a big role in deciding what measures to apply.
A study of tourist areas around Australia argues for a system of licensing permits, with a cap on the number of short-term rental properties per municipality. Only “dedicated short-term rentals” (and not spare rooms in people’s houses) would be covered. Where the number of such properties is judged unreasonable, the number of licenses would be reduced over time.
A practice in various overseas cities is to limit the number of nights per year for which a short-term rental property can be let out. This limits the financial advantages for landlords of short-term compared to long-term rentals.
A levy on short-term rental bookings can yield a similar effect. From 2025, Victoria is to place a tax of 7.5 per cent on these bookings under its “short stay levy” system. Ideally, such taxes should go to build public housing.
In deciding on legislation, a particular need is to distinguish between small-scale operations, that rent out only one or a handful of properties, and corporate organisations that buy up numerous dwellings and turn short-term rentals into a (highly profitable) business. If corporations want to cash in on the demand for short-term rentals, they should build the accommodation to start with. They should not be allowed to purchase existing housing.
Download our Position Statement (PDF), with references included.
Anti-Poverty Network SA 