Short stay accommodation rate hike concerns

Airbnb hosts have told Adelaide City Council that they’re confused by plans to charge them a commercial rate under a new policy in the upcoming budget.

May 15, 2024, updated May 15, 2024
Graphic: Jayde Vandborg

Graphic: Jayde Vandborg

The property owners said they didn’t understand the process by which the council planned to charge them commercial rates about 20 per cent higher than residential, under a new policy for short-stay accommodation owners in the city.

The council agreed to the move in April while preparing the draft 2024/25 budget.

At last night’s council meeting, the public were invited to ask questions or give feedback on the plan, which would impose a commercial rate on residential homes used primarily for short-stay accommodation such as Airbnb and Stayz.

Nicole and Scott Donaldson own an apartment in Sturt Street which they rent out short-term, and told councillors they didn’t feel adequately informed about the rate changes.

Nicole said she had “no idea about the proposal” until she heard about it from a community leader of the Adelaide and South Australia Airbnb Host Club.

“I’m like a small business owner I would say, it’s just my own one apartment as opposed to real estate companies that own and rent out multiple, like dozens of places,” she said, questioning why a commercial rate would apply to them.

The commercial rate is about 20 per cent higher than the residential rate. Lord Mayor Jane Lomax-Smith said her home’s council rates were $2000, and an owner of short-stay accommodation would pay about $400 extra under the commercial rate.

Lomax-Smith said the rate change was equitable as other, larger short-term rental businesses already paid commercial rates.

“Some of them have complained that there’s not an even playing field in that they pay commercial rates, and some people competing against them in the open market pay less, so there is an equity issue,” she said.

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Deputy Lord Mayor Keiran Snape said he’d heard concerns that people who were owner-occupiers of their homes but rented out one room or a granny flat would be affected by the rate changes.

Council CEO Michael Sedgman said that wouldn’t be the case as the policy would  focus on the predominant use of the property – meaning it would be based on whether accommodation was the main use and how often it was rented out for short stays.

“That does not include co-habited dwellings…if someone owns a house and they rent out one room they are not intended to be caught in addressing the definition of predominant use,” Sedgman said.

The council has identified approximately 934 properties within the City of Adelaide that are available to stay in for between $195 – $238 per night.

Of these 934, about 400 are available to stay in for six months each year.

At this stage, the council would look at switching to a commercial rate for properties that are being used as short stay accommodation for more than 90 days, and will account for the income-earning potential of the properties when evaluating them for a rate hike.

The public can comment on the proposed rate changes as part of the council’s draft 2024/25 Business Plan and Budget consultation before midnight, May 19.

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