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Council to vote: Melbourne’s proposed short-term rental crack sparks business outcry

The City of Melbourne’s proposed plan to regulate short-term rentals has been met with sharp criticism from business groups. 

The council will vote this week on the measure, which aims to tackle the state’s housing crisis by capping rentals at 180 nights a year and implementing a $350 annual registration fee for property investors.

Paul Guerra, CEO of the Victorian Chamber of Commerce and Industry, warned of the “unintended consequences” on tourism. 

“We urge the City of Melbourne to withdraw this perplexing idea until the state government releases its housing reform plan,” he told the Herald Sun.

He described the proposal as a “massive misstep” and “nonsensical,” stating it would put Melbourne’s central business district “out of step with the rest of Victoria.”

Cath Evans, Victorian director of the Property Council of Australia, also questioned the plan. 

“We would like to see the modelling and intention behind this initiative and whether the goal to deliver longer-term housing supply to the market is achieved through this mechanism,” she said.

But Lord Mayor Sally Capp has defended the proposal. 

“Research indicated night caps are probably the most compelling lever that can be pulled to flip short stay accommodation into longer-term homes,” she said. 

Ms Capp denied targeting property investors and expressed a desire for them to become “heroes for people seeking long-term rentals.”

The proposal would guide tourists away from Airbnbs towards hotels and motels, which Ms Capp said would not drive up accommodation costs due to the more than 10,000 new hotel rooms added in the past two years, and 1200 more under construction.

Felicia Mariani, CEO of the Victorian Tourism Industry Council, noted that Airbnbs are “not as prevalent, nor as critical” for accommodation supply in the city. 

Susan Wheeldon, Airbnb Australia and NZ country manager, advocated for a statewide framework “with the Victorian government best placed to manage the sector.”

Sam Groth, opposition tourism spokesman, called for caution, citing potential impacts on retail, hospitality, and entertainment. 

A Victorian government spokesman said they are working on a housing package, acknowledging that housing is the state’s most pressing issue.

Melbourne, home to one of Australia’s biggest short-term rental markets with over 4100 properties, has a deficit of about 5500 affordable housing units. 

If approved, the new laws will come into effect by February next year.

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