1. The 7.5% short stay levy

Victoria introduced a 7.5% short stay levy from 1 January 2025 under the Short Stay Levy Act 2024. It applies to all stays of fewer than 28 consecutive nights.

1.1 How it works

The levy is calculated on the total booking fee, which includes the nightly rate, cleaning fees, service charges, and GST. It does not apply to payment processing fees or damage bonds.

On a $1,000 booking, the levy is $75.

1.2 Who pays and who collects

For platform bookings (Airbnb, Booking.com, Stayz), the platform collects the levy from the guest and remits it to the State Revenue Office (SRO). Hosts do not handle the levy on platform bookings.

For direct bookings (your own website or private arrangements), the property owner must register with the SRO, lodge returns, and pay the levy directly.

1.3 Exemptions

The levy does not apply if the property is your principal place of residence (for example, renting your home while you are on holiday). It also does not apply to hotels, motels, hostels, or other commercial residential premises.

1.4 Where the money goes

Revenue from the levy (projected at $70-75 million per year) goes to social and affordable housing via Homes Victoria, with 25% earmarked for regional Victoria.

2. Owners corporation ban powers

From 1 January 2025, the Short Stay Levy Act 2024 also amended the Owners Corporations Act 2006 to give owners corporations the power to ban short-term letting entirely.

2.1 How a ban works

An owners corporation must pass a special resolution requiring 75% of lot owners (or 75% of lot entitlements) to vote in favour. If passed, short-term letting is prohibited in the building.

2.2 PPR exemption

The ban cannot apply to a lot that is the owner's or occupier's principal place of residence. If you live in the apartment and rent a room while you are there, the ban does not affect you.

2.3 The three-strike rule (from 2019)

Even without a full ban, the earlier 2018 amendments introduced a breach notice system. If a lot receives three breach notices within 24 months (for noise, damage, safety hazards, or obstruction of common property), VCAT can prohibit that lot from being used for short stays for a set period.

VCAT can also award up to $2,000 compensation to affected residents and impose fines of up to $1,100 per breach. Owners and guests are jointly and individually liable.

2.4 What to check before buying

If you are buying an apartment for short-term letting in Melbourne, check whether the owners corporation has passed (or is considering) a ban resolution. Review the minutes of the last two AGMs and ask the OC manager directly.

3. Safety requirements

Victorian safety obligations for rental properties are among the strictest in Australia. They apply to short-term lets as well as long-term tenancies.

3.1 Gas safety

A licensed Type A gasfitter must inspect all gas appliances, fixtures, and fittings every two years. You must disclose the date of the most recent check before any letting agreement.

3.2 Electrical safety

A licensed electrician must inspect all electrical installations, appliances, and fittings every two years. Your switchboard must have modern circuit breakers and RCDs (safety switches) - this has been required since March 2023.

3.3 Smoke alarms

Working smoke alarms must be installed on every storey of the property, between bedrooms and living areas. They must be checked and confirmed working annually.

3.4 Pool safety

If the property has a pool or spa, barriers must comply with Building Regulations 2018. Written notice is required if a barrier is not working.

3.5 Records

Keep copies of all safety check reports. You must provide them to guests if requested and may need them for insurance claims or OC disputes.

4. Tax obligations

4.1 Income tax

All short-term rental income must be declared to the ATO. Deductible expenses include mortgage interest, council rates, insurance, cleaning, property management fees, platform fees, depreciation, and repairs. The ATO's Draft Ruling TR 2025/D1 tightens rules on deductions for properties not genuinely available for rent. For more on Australian tax, see our guide to Airbnb hosting fees in Australia.

4.2 GST

Standard residential short-term rentals are generally GST-exempt. GST applies only if the property operates as commercial residential premises and turnover exceeds $75,000.

4.3 Land tax

Investment properties used for short-term letting are subject to Victorian land tax. The 2026 threshold is $50,000 (general) or $25,000 (trusts and companies). An absentee owner surcharge of 4% applies on top.

4.4 Vacant Residential Land Tax

If a property is vacant for six or more months in a calendar year, it may be subject to the Vacant Residential Land Tax at 5x the Local Property Tax rate. This applies statewide from 2025 and is designed to push vacant properties into the rental market.

5. Planning and night caps

5.1 Planning permission

Victoria does not impose a statewide planning permit requirement for short-term rentals. Whether you need a permit depends on your zone, the local planning scheme, and the nature of your operation. In most residential zones, using a dwelling for short-term guests does not trigger a permit. Operating at scale or changing the building's use classification may require one.

Check your specific council's planning scheme via planning.vic.gov.au.

5.2 Night caps

Some Melbourne councils apply a 180-night limit on unhosted stays. A 90-night cap has been proposed (the Victorian Parliamentary Budget Office costed a Greens proposal that could push 13,000+ properties back into the long-term rental market) but has not been legislated statewide.

Hosted stays (where you live in the property) are generally not subject to night caps.

5.3 Melbourne vs Sydney vs Gold Coast

State levy: Melbourne charges 7.5%. Sydney and Gold Coast have none.

Registration: Melbourne has no statewide register. Sydney requires mandatory STRA registration ($65 new, $25 renewal). Gold Coast has no register.

OC/strata ban: Melbourne OCs can ban with 75% vote. Sydney strata can ban with 75% vote. Gold Coast body corporates cannot ban (BCCMA s180).

Night cap: Melbourne applies 180 nights at council level. Sydney caps at 180 nights statewide. Gold Coast has no cap.

For the full picture on Gold Coast rules, see our guide to Gold Coast short-term rental rules. For Sydney, see our guide to Sydney STRA rules.

6. What is changing

6.1 90-night cap proposal

The Victorian Greens have proposed reducing the unhosted night cap to 90 nights statewide. The Parliamentary Budget Office estimated this could affect 40% of metro Melbourne STR properties. It has not been legislated but the political momentum is toward tighter limits.

6.2 Council-level regulation

Mornington Peninsula Shire is the most active council, pursuing additional restrictions including planning permits and tighter night caps. The City of Melbourne paused its own policy development (which included a proposed $350 annual registration fee) after the state levy was announced.

6.3 ATO deduction changes

Draft Ruling TR 2025/D1 takes a stricter approach to deductions for mixed-use and holiday properties. Properties must be "genuinely available for rent" to claim full deductions. Watch for the final ruling before lodging your 2025-26 return.

6.4 Insurance

Standard home insurance does not cover short-term rental use. You need specialist STR insurance covering buildings, contents, public liability, and guest damage. Major Australian providers include ShareCover, Terri Scheer, and EBM RentCover. For more on what hosting costs overall, see our guide to costs of running a holiday let.