Light as Air: Regulating Short Term Rentals in Australia

August 31, 2023

Equitable Housing

The impact of short-term rental (STR) platforms such as Airbnb has become increasingly problematic in Australia’s residential rental market, particularly since the end of the COVID19 lockdowns, as long-term rental dwelling availability has shrunk and prices increased.

This policy challenge has been growing for many years. Airbnb has been expanding rapidly since it arrived in Australia in 2012: between 2016 and 2019, average revenue growth was 2.43% per month. Since then, online STR platforms have fundamentally changed the geography of tourism, shifting a large swathe of holidaymakers from traditional short-term accommodation such as hotels, motels and caravan parks, into domestic dwellings scattered throughout our residential neighbourhoods.

This has led some communities to feel invaded by short term holidaymakers, with the proportion of homes dedicated to short term rentals tearing at the social fabric of neighbourhoods.[1]

Using the data on Airbnb listings gathered by Inside Airbnb,[2] this paper examines the Airbnb market in six different regions of Australia, to explore what effects are at play and, importantly, to determine what regulatory interventions would be appropriate in response to this significant shift in dwelling stock usage.

Some of our key findings include:

  • In the six regions studied for this report, there are over 86,693 properties listed on Airbnb alone. Airbnb represents an estimated 75% of the STR market.[3] This means that the total STR market in the six regions included in this paper is likely around 115,591. Previous research has estimated that around 251,000 dwellings are listed on STR platforms.[4] 251,000 STR dwellings is equal to 2.3% of the nation’s 10,852,208 dwellings,[5] and equivalent to 7.6% of all rental dwellings.
  • Average Airbnb yields are extremely high compared to income from long-term rentals. In all areas studied, short-stay rental properties had the potential to exceed local median annual rental yields in fewer than 100 nights. However, in some areas, it only takes 25 nights of Airbnb yield to equal the median long-term rent for the year. Gaps between median rents and Airbnb incomes were more severe in regional areas than in capital cities.
  • A significant proportion of properties are not adhering to restrictions on short-term rental operations in New South Wales. 22.2% of listings in Sydney and 21.0% of listings in the Byron Shire Council exceeded 180 nights booked in the year preceding the data analysis, which was conducted in March 2023. This is despite legislation restricting bookings to 180 nights in these regions.
  • Despite most active listings being available year-round, many listings are booked for a total of fewer than two months annually. 58% of listings in the Mornington Peninsula and 57% of listings in the Northern Rivers were booked for fewer than sixty nights a year. This may represent housing stock that is effectively vacant for most of the year.
  • Several ‘mega-hosts’ managing dozens of properties were identified in each region. Extreme examples included an individual host with a portfolio of 182 listings across Sydney. Properties managed by mega-hosts included a number of informal hotels comprising of clusters of listings by a single host in one location.
  • The impact of Airbnb varies dramatically across different towns and suburbs. For example, in Blairgowrie, Victoria, more than 32% of dwellings are listed on Airbnb, but the rate of Airbnb is far lower in neighbouring towns. This suggests that regulation must be highly responsive to local effects and the specific needs of residents.

This report aims to provide an evidence base for policymakers, both in terms of understanding the impact of STRs and identifying suitable regulatory responses. It includes a review of current Airbnb regulations around the country and compiles a set of international measures currently being used by other jurisdictions.

Based on these examples, and the local effects of the STR sector, we propose that STR sector regulations should include:

Recommendation 1: Short-term rental registries in each state and territory

Each state and territory to establish a short-term rental registry to provide a foundation for further STR reforms. A model similar to the proposed EU model, in which every dwelling or room listed in the European Union would be required to have a registration number linking a dwelling to a host’s information, would provide governments with more cohesive, detailed and reliable data, and help with compliance and fraud detection.

Recommendation 2: Data sharing requirements for STR platforms

Federal or state and territory governments should negotiate access to listings data from STR platforms to enable state and local governments to be able to monitor and assess trends in the STR sector.

Given that small towns are often the most affected by high Airbnb density, their ability to negotiate data access may be limited. For this reason, it would be preferable for state/territory or federal governments to negotiate collectively with STR platforms, under a standardised framework of data criteria.

Recommendation 3: State/territory STRA regulatory frameworks

State governments should amend their state planning provisions to provide a standardised set of criteria, definitions, limitations, fire safety and other requirements for STR hosts, such as has been carried out by the NSW government. State planning provisions should also be amended to facilitate council decisions to reject planning approvals for STR applications.

Recommendation 4: Statutory planning tools

Councils should amend their planning schemes to require entire-home listings to apply for planning permission in order to operate as STRs. This would only apply to listings exceeding a certain nightly limit, which should be set by individual councils or through state STRA frameworks.

Recommendation 5: Council rate increases

Local governments should increase council rates for STR properties. Criteria may differ between locations, but for unhosted STRs, available for most of the year, and in use as an STR for over a particular threshold, rates should significantly exceed residential rates.

Recommendation 6: Enforcement mechanisms

In the absence of broad data collection, spot fines should be utilised by councils to improve compliance. For example, where a person lists their property on an STR platform without appropriate council permission, or for more nights than is legally permitted, fines should be sufficiently high, and publicised broadly enough to put off law-breaking. As a point of reference, the 5000 Euro fine in Ireland for the listing of unregistered STR dwellings equates to $8420.

Where landlords repeatedly flout STR regulations, they should be temporarily or permanently disbarred from future STR planning applications.

Recommendation 7: Emergency use requirements

As climate-change related natural disasters become more common it would be prudent to build in an element of responsiveness from the STR sector. In the event of a natural disaster such as flooding or bushfires, empty STRs should be utilised by state emergency services to provide temporary shelter to survivors, with the state paying a reasonable rate of compensation.



[1] Mostafa Rachwani, ‘Short-Term Rentals Destroying “Social Fabric” of Region, Byron Bay Residents Tell Inquiry’, The Guardian (online, 22 February 2023) <>.