A Tax on Use, Not Abuse: The Short Stay Levy and Victoria’s War on Private Property Rights

For many property owners across Victoria, the upcoming Short Stay Levy, due to commence on 1 January 2025, represents more than just another fee or bureaucratic hoop to jump through. It symbolises a broader and more troubling trend—a cash-strapped government lurching from one populist announcement to the next, targeting everyday Victorians to fill the fiscal void left by years of waste, mismanagement, and politically motivated expenditure.

The 7.5% Short Stay Levy on all income derived from short-term accommodation is being sold as a socially just initiative: a Robin Hood policy to take from those who "hoard houses" and give back to struggling renters. But the reality, as with most quick-grab policies framed in populist rhetoric, is far more cynical. Rather than solving the housing crisis, this levy punishes responsible property owners and mischaracterises the very purpose of short-stay accommodation in modern Australia.

The False Narrative: “Greedy Investors” vs “Desperate Renters”

The government’s justification is clear: short-stay rentals are “removing” housing from the long-term market, driving up rents, and pushing families into hardship. But that narrative is built on shaky assumptions and wilful ignorance of basic property economics.

Most short-stay properties are not sitting idle for speculative gain. In many cases, they are used by their owners for part of the year—for holidays, retirement planning, work commitments, or family events. These homes were never truly “available” to the long-term rental market and certainly were not removed from it recently.

If anything has driven properties away from long-term rental, it’s the government’s own oppressive tenancy laws introduced under the Residential Tenancies Amendment Act 2018 (Vic) and various COVID-era moratoriums. These measures have disempowered landlords, expanded tenant rights to near-infinite degrees, and added layers of compliance, uncertainty, and risk to an already strained sector. It is little wonder owners have sought out more flexible, economically viable alternatives.

A Revenue Grab in Disguise

This new levy is forecast to raise tens of millions of dollars annually. The funds, we are told, will go toward “social and affordable housing”—a cause no one dares question. But let us not forget, this is the same Victorian Government that spent over $2 billion cancelling the Commonwealth Games, poured billions more into cost blowouts for road and rail projects, and continues to accrue debt at record levels.

The Short Stay Levy is less about housing and more about revenue—pure and simple. And unlike a progressive tax or targeted infrastructure levy, this impost hits mum-and-dad investors, retirees, and regional property owners—many of whom rely on short-term letting income to support their own cost of living.

A Legislative Overreach

Beyond the fiscal impacts, this policy raises serious questions around regulatory creep and property rights. The government is reaching into private contractual arrangements and dictating terms under the guise of public policy, all while continuing to treat short-stay accommodation providers as an inferior class of investor.

In many regions, local councils already impose registration fees, compliance obligations, and zoning restrictions on short-term accommodation. Now, a statewide tax—ostensibly enforceable via digital booking platforms—will layer additional complexity onto an already fractured compliance landscape.

The Planning and Environment Act 1987 (Vic) and Local Government Act 2020 (Vic) are likely to be amended to enable these changes, despite offering little in the way of actual coordination with local councils, tourism operators, or property professionals. Once again, it is a case of policy by press release, not consultation.

The Bigger Picture: Undermining Investor Confidence

The Victorian property market has endured relentless legislative change over the past decade. From stamp duty surcharges to foreign owner fees, land tax hikes, rent caps, and now this levy—owners are being squeezed from all directions.

In a state where land tax assessments are now hitting middle-income households, the addition of this short-stay tax borders on vindictive. It sends a loud message to property owners: “We don’t want you to profit from your assets unless we’re getting a cut.”

Ironically, this will almost certainly discourage investment, reduce tourism accommodation stock, and drive prices up for travellers—particularly in regional towns that rely on short-stay properties to support local events, seasonal tourism, and agricultural workforces.

Conclusion: A Policy with No Long-Term Gain

The Short Stay Levy will do little to restore housing supply.

It will not make renting more affordable.

And it will not fix Victoria’s broken housing system.

Instead, it punishes owners for daring to use their own property on their own terms. It substitutes policy performance for political theatre, and it further entrenches the government’s role as both arsonist and firefighter in the housing crisis it helped create.

Victorians deserve better than haphazard, punitive revenue policies dressed up as social justice. We need clear, consistent, and balanced laws that protect both tenants and property owners—and we need a government that understands that private ownership is not a problem to solve, but a foundation to preserve.