21 June 2022

Brisbane landlords face rates hikes for renting on Airbnb - should we follow suit to increase rental stock?

| Lottie Twyford
Join the conversation
Housing from above

The latest Anglicare report shows that Canberra’s rental crisis is worsening. Photo: Michelle Kroll.

Property owners in Brisbane who put their homes on the short-term rental market have been told to return them to the long-term rental market or pay 50 per cent higher rates.

The move is a response to extremely low vacancy rates – something Canberra is also experiencing.

The vacancy rate in the Queensland capital was around 0.6 per cent in May. In the ACT, it was 0.5 per cent earlier this year.

Here, local politicians have also set Airbnbs in their sights.

Last month, Greens MLA Johnathan Davis moved a motion in the ACT Legislative Assembly calling on the ACT Government to consider investigating the impact of short-term accommodation on the Territory’s rental crisis.

READ ALSO YWCA Canberra slams community groups for ‘gaming’ planning appeals

The crossbencher acknowledged the Territory is now a long way behind Brisbane, whose idea he described as “progressive”.

“This is in stark contrast to the ACT Government which does not even know how many Airbnb properties there are and does not impose any rules or additional taxation measures on owners who choose to use platforms like Airbnb,” he said.

“We don’t have a read on the scale of the problem, which makes it very hard to design policy, so the first step is collecting that data.”

Although some in Queensland have argued the move is not harsh enough – and one Greens councillor in Brisbane called for the city council to increase rates by 500 per cent instead – Mr Davis said it was not only about the figure but about the message the policy sent to the market.

“A step like this sends a clear indication to property investors that their government does not want to incentivise this type of property investment,” he said.

Johnathan Davis

ACT Greens MLA Johnathan Davis moved a motion calling on the ACT Government to consider an inquiry into the impact of short-term rental platforms on the market. Photo: ACT Government.

The crossbencher’s recent motion passed with tri-partisan support. It was then referred to the Assembly’s Committee on Planning, Transport and City Services, which will ultimately decide if an inquiry should be conducted.

Mr Davis said convention would dictate the committee would indeed investigate what the Assembly had called on it to do.

He hoped the inquiry could examine the current regulatory and planning settings for managing platform-based accommodation in other states and locally, and whether adjusting these could help increase the number of long-term rental properties available in the ACT.

Mr Davis argued that clamping down on Airbnbs was good for renters and the hotel industry, which had also suffered throughout the pandemic.

READ ALSO Skittish’ mum and dad’ investors worry about the future for Canberra’s renters

In Brisbane, there are around 3600 properties listed on the short-term market.

According to short-term data accommodation data analysis company AirDNA, there are around 920 active rentals in Canberra listed on the short-term rental market. Of these, 80 per cent (around 700) of houses – which is the number advocates are concerned with.

Better Renting has been crunching the numbers for some time.

Founder Joel Dignam said returning Airbnbs to the long-term rental market would make a material difference.

On average, there are around 800 properties listed at any one time to rent in Canberra.

“If you imagine those properties get added to the pool and spread out across the year – let’s say 60 at a time – that would almost increase the rental pool by 10 per cent,” he explained.

“That would be a jump and would mean less competition, more choice and eventually, more affordability.”

READ ALSO Energy crisis shows governments need to power up to put consumers first

The latest Anglicare Australia snapshot showed there were almost no properties deemed as “affordable” for people on income support to rent in the ACT.

Affordable rent is considered to be no more than 30 per cent of a person’s income.

Canberra has repeatedly been listed as the most expensive city in the country to rent.

The ACT Government is also considering a range of reforms that would, among other things, prevent landlords from ending leases without cause, seek to regulate and prohibit rent bidding, and set minimum standards for rental properties.

But some in the property industry have criticised the timing of such reforms, arguing they may lead to investors leaving the market and selling up.

Join the conversation

All Comments
  • All Comments
  • Website Comments

I think Better Renting operate in an academic world more than the real world. I wonder how long it will take them to realise that they’re rental policy wins around: driving property investors out of the Canberra market; setting minimum property energy standards; and placing controls on annual CPI rental increases is actually having a perverse effect on the city’s rental market.

Every rental property win they’ve had with the ACT government over the last decade has actually led to higher Canberra rents.

Are they not aware of historical examples of inverse consequence, where the outcomes prove to be the reverse of the logical end-product? Surely Better Renting can’t ignore the data any longer. They’ve driven Canberra to have the highest rents in Australia and put us amongst the worlds top 5. I’d be embarrassed to represent an organisation with those outcomes for renters.

It’s a clear case of cutting off your nose despite your face. If there were only 100 rental properties left in Canberra, does Better Renting really believe they would all be cheaper than having 10,000 rentals?

I apologise for highlighting that the emperor has no clothes, but somebody has to do it.

Angry? It means you may know too much. I spoke recently to Uni graduates. Most of them have no idea what “Rates” or “Land tax” are. Few know of it but unsure of the amount and how often they are paid. Similar situation is with adults as most don’t know of Land tax. Even more interestingly that even many landlords don’t know of the amount of rates and land taxes because agents take care of all bills. Even if they do many may not link high rents and high rates and land tax because they don’t look at the bottom line (their tax agents do). However all of them are acutely aware of high rents. So. If you assume that Rates and Land taxes do not exist or not quite important for the rent and the rental supply (perhaps even the author of this article) – read the article again. Isn’t the idea of fixing rental supply issue by increasing taxes really smart? If you are landlord who directly pays these bills then you have to remember two rules. Rule 1) you must learn that your property is a place to live for someone else rather than your wealth vehicle. And rule 2) if you still disagree, keep reading rule #1

Im not sure where Mr Davis or Better renting think they should dictate how investors use their rental properties? They didn’t save the deposit or pay the stamp duty and I don’t see them chipping in on the land tax, rates, water or levies… The most recent reforms where tenants can do make alterations without approval, get pets without approval were hard to swallow and now they want to take away the right of the owner to terminate a tenancy for no reason. News flash – sometimes owners and tenants don’t get along. This is another ill advised move with what appears to be little consultation with people actual in the know.

If Mr Davis wants to increase rentals and their affordability, wouldn’t it make more sense to scrap Land Tax entirely?

You never make anything cheaper by adding a tax to it.

I am convinced by you that increasing a price does not make the price lower. One could say, well noticed.
However, is that all there is?
In the short to medium term reduced taxes flow to profit share, not to reduced prices, and vice versa.
Assume tax is increased; profit immediately reduces. The prudent investor now evaluates capacity to increase price or whether there is a superior alternative investment for their capital, remembering that capital recovery (property sale) may also have deteriorated at this point, increasing implied yield on the existing capital.
Alternatively, assume tax is reduced, which you suggest should make rentals cheaper. Invert my above comments. Rentals do not reduce in the short to medium term but profits are increased. This attracts more investors, driving up prices (invested capital). Yields must be maintained or else there would be a more attractive alternative. The nett is that any rental price reduction is small. Worse, we have a distortion of capital markets through over-investment in housing compared with in productive industry, reducing national wealth (all our welfare) in the longer run.
I take it you took all of this into account in your comment?
Land tax is an efficient resource rent tax on capital investment in land, meaning not only that it is appropriately targetted but that there is low overhead in its collection, which is better for all of us.

I’m a bit dubious of the 900 Canberra properties Air BnB claim. Just selecting a region and getting the web page count of available properties isn’t a true reflection of the number of short term rental properties available in Canberra.

Just a few issues include:

Duplicate entries for the same property, or different rooms within the same property appear as separate entities.

People list the house or unit as available for short term rent (only for a set period whilst they’re on holiday or can stay with family). This is a pretty common way to earn a few bucks when you’re not staying at your property.

Some properties are actually current renters who sub lease without the landlord knowing. Lots of renters in and around Civic and Braddon do this. I had two colleagues who regularly did this and they would simply stay back at their parents for a few nights if they got a good price from the guests. Easy money.

Setting just a few filters on Airbnb site quickly got me down to a third of the claimed number of properties from the article.

It will be interesting to hear the findings however. Let’s hope they can get some real data, not just estimates. Don’t bank on AirBnB giving the government their client data and property counts.

Pushing Air BnB’s back into the rental market in popular holiday places like Byron, Gold Coast, Cairns etc might help those areas but the government needs to increase it’s stocks in public housing availability for people to rent or rent to buy. Putting a tax on the private rental market to make it less attractive to private rental investors will also help as these investors prey on the needy and they drive the prices up.

are Airbnb renters paying land tax in the ACT?

Yes, once the property stops being your principal place of residence you pay land tax on it

pink little birdie11:16 am 22 Jun 22

or they could do what other places do. License the number of short term rentals allowed in the jurisdiction – it works as there are still properties for rent under it and all are maintained and keep the peace because there are wait lists for having the license.
Or they can go back to allowing 2 air b&b where one must be your primary property. After it should be considered a hotel/holiday house business and be required to meet the legal requirements of providing those services.

This seems a massive overreaction to a problem that the government itself is partly responsible for. You don’t fix one problem by causing another.

Why should we protect “hotels” over short term rentals?

Obviously we need to create a level playing field for businesses to compete but this argument seems similar to that used by taxi companies that they should be protected from Uber with a new business model. Don’t we want to encourage easier movement and visitation of our city?

If the government wants to address the rental issues, this seems to be a strange way to go about it.

Daily Digest

Want the best Canberra news delivered daily? Every day we package the most popular Riotact stories and send them straight to your inbox. Sign-up now for trusted local news that will never be behind a paywall.

By submitting your email address you are agreeing to Region Group's terms and conditions and privacy policy.