Should negative gearing be disallowed for short-stay rental homes? That’s the argument behind a new housing affordability campaign by homelessness advocacy group, Everybody’s Home.
Everybody’s Home (EH) is a website and campaign group. It is backed by Australia’s major religious and homelessness charities.
In an influential report released on Monday, EH cites research that short-stay platforms like AirBnb and Stayz have taken 167,955 entire properties off the rental market. The number does not include listings for just a room-to-rent.
Negative gearing – a tax policy that allows investors to deduct losses on rental properties, including interest and maintenance costs – is intended to stimulate investment in properties destined for the rental market. So its use for short-stay tourist accommodation appears questionable.
These are tax breaks that official hotels do not receive. As the EH report puts it, “In effect, the tax system is subsidising the conversion of homes into tourist accommodation at a time when the housing system is under extreme pressure.”
The following table from EH estimates the annual cost to the federal budget in foregone tax revenue. The “scenarios” represent estimates of the number of short-stay tourist properties that are negatively geared.
The scenario hits the hardest in touristed regions like the Gold Coast, NSW Northern Rivers, Cairns and Point Nepean. Renters anecdotally report numerous 6-month, fully-furnished listings that end in late spring, in time for the summer holiday high season.
Everyone agrees housing affordability action is needed. Over 70 percent of renters nation-wide are in housing financial stress, defined as spending more than 30 percent of income on rent.
But are the changes to tax concessions on short-stay properties likely? And what difference does AirBnb really make?
EH is gaining real traction. Its campaign asking MPs to “pledge” support for more public housing and more affordable housing has drawn in Albanese and a number of Labor ministers, as well as high-profile progressives including Sophie Scamps, Zali Stegall, David Pocock and Mehreen Fahruqi.
And yes, the 168,000 short-stay properties make up 5.8% of the roughly 2.9 million private rental nation-wide. So while such a change wouldn’t be revolutionary, it would affect the rental market by encouraging some owners to convert their properties to long-term leases.
Sign Up To Our Free Newsletter