Airbnb Rules in Victoria: Complete 2025 Compliance Guide for Short Stay Accommodation Hosts

Short-term rental rules in Victoria, Australia have fundamentally changed with the introduction of a new short stay levy effective 1 January 2025. Property owners now face a 7.5% short stay levy on eligible bookings and new registration and lodgement obligations with the State Revenue Office, alongside the possibility of additional local rules (such as registration schemes or night caps) introduced by individual councils.

The Victorian Government has implemented these new rules to address housing affordability concerns while funding social and affordable housing initiatives through levy revenue.

What this guide covers:

This guide covers all essential compliance requirements for 2025: The 7.5% short stay levy calculation, , local council registration and planning requirements, owners corporations’ new powers to ban short stay accommodations and tax obligations for Airbnb hosts.

Who this is for:

This guide is designed for current Airbnb hosts, property investors considering short-term letting, and property managers operating in Victoria. Whether you’re managing a single investment property or a portfolio of short term rental accommodation, you’ll find specific compliance requirements and practical implementation strategies.

Why this matters:

The new regulations carry significant financial and legal consequences. Non-compliance can result in substantial penalties from local councils, removal from booking platforms like Airbnb and Booking.com, and potential disputes through the Victorian Civil and Administrative Tribunal. Property owners who fail to understand these new rules risk losing their ability to operate short-term rentals entirely.

What you’ll learn:

• How the 7.5% levy applies to all booking fees including cleaning fees

• Registration processes and documentation requirements

• Night cap limits and exemptions for primary residences

• Owners corporations’ authority to ban short-term rentals

Understanding Victoria’s Short-Term Rental Regulatory Framework

Short-term rental accommodation is now defined under Victorian law as any property offered for rental periods of less than 28 consecutive days. This includes all Airbnb, Vrbo, Booking.com and similar short stay platform bookings, fundamentally changing how the Victorian Government regulates vacation rentals.

The January 1, 2025 implementation represents the most significant shift in Australia’s short-term rental regulations, designed to balance tourism industry needs with housing availability for local residents.

The 7.5% Short Stay Levy

The new levy applies to all bookings under 28 consecutive days and is calculated on the total booking value including short stay accommodation fees, cleaning fees, service charges and GST where applicable (excluding credit card fees). Any existing short-term rental property specific council charges are removed once the state levy takes effect, although councils may still regulate short stays through planning and local laws.

Most platform operators like Airbnb and Stayz automatically collect and remit the levy to the State Revenue Office for bookings made through their systems. Where bookings are taken directly (for example via your own direct booking website), the host must register for the short stay levy and lodge returns themselves through the Victorian Government’s registration system.

The levy is intended to raise funds for social and affordable housing.

Night cap restrictions

As at 2025 there is no statewide night cap on short stay accommodation in Victoria though such limits have been proposed. However, some local councils may introduce their own limits on the number of nights a property can be let as short stay accommodation each year, typically targeting unhosted investment properties in areas with acute lack of housing availability.

Hosted accommodation where property owners live on-site in their own primary residences during guest stays is often treated more favorably in local rules, but you must always check your local council’s planning scheme and short-stay policies to confirm whether any caps apply to your property.

Night cap restrictions create specific compliance obligations that obligated short stay property owners must address to continue operating legally.

Key Regulatory Requirements for Victoria Airbnb Hosts

The new regulations establish multiple compliance areas that property owners must navigate simultaneously, from state-level levy obligations to local council registration requirements and potential owners corporation restrictions.

Registration and lodgement System

Hosts who are responsible for paying the levy must register with the State Revenue Office’s short stay levy system, launched in early 2025, providing detailed property information including address, ownership details and intended use classification. Operators with annual turnover exceeding specific thresholds face quarterly lodgement requirements, while smaller hosts may qualify for annual reporting.

Separately, some local councils operate their own registration or permit schemes for short stay properties. These are enforced at council level and are not the same as the State Revenue Office levy registration.

Council and owners corporation powers

Local councils now possess enhanced authority to regulate short-term rentals within their jurisdictions, including mandatory registration, annual fees and additional restrictions beyond state requirements. These local governments can impose fines for non-compliance and require permits for properties exceeding any night cap limits.

Owners corporations governing apartment buildings and strata schemes gained significant new powers to ban short-term rentals entirely. From 1 January 2025, owners corporations can make rules to ban the use of lots for short stay accommodation, provided the rule is passed by special resolution (75% of lot owners or lot entitlements) and is consistent with other laws. These rules cannot apply to lots that are the lot owner or occupier’s principal place of residence, so owners who live in their apartment can still host short stays in their home (for example, renting rooms while they live there or when they are away temporarily).

Tax and documentation requirements

Property owners must maintain comprehensive records for levy compliance, including booking details, fees charged and platform transactions. This documentation supports both state levy obligations and existing income tax requirements for rental income from short term rental properties.

Capital gains tax and income tax outcomes can differ depending on whether a property is used as your main residence, a long-term rental or a short-stay investment. Hosts should seek advice from a tax professional about how their specific arrangements interact with existing Australian Taxation Office (ATO) rules.

Understanding these requirements enables short stay property owners to develop systematic compliance processes.

Step-by-Step Compliance Process

Property owners face preparation requirements such as requiring proactive documentation and registration to avoid penalties from the first day of operation.

Step-by-step: Preparing for the Short Stay Levy

When to use this: All hosts with bookings under 28 days

1. Calculate total booking value: Include accommodation fees, cleaning fees, service charges and applicable GST to determine the levy base amount

2. Apply 7.5% levy calculation: Multiply total booking value by 0.075 to determine levy obligation for each reservation

3. Register with Victorian system: Complete property registration including ownership details, property classification and intended use documentation

4. Establish lodgement schedule: Determine quarterly or annual reporting requirements based on projected turnover and submit returns accordingly

Comparison: Primary residence vs. investment property rules

Properties serving as the owner’s principal place of residence receive significant regulatory advantages, particularly regarding night caps and potential owners corporation bans affecting other investment properties.

Despite clear regulatory frameworks, short stay property owners commonly encounter specific compliance challenges requiring targeted solutions.

Common Challenges and Solutions

Many hosts struggle with determining their property’s regulatory status, calculating complex levy obligations and managing compliance across multiple booking platforms under Victoria's new rules.

Challenge 1: Determining primary residence exemptions

Solution:

Establish primary residence status through utility bills, electoral enrollment and occupancy records demonstrating the property serves as your principal place of residence for the majority of each year.

Documentation should include council rates notices, driver’s license registration and evidence of personal occupancy during periods when the property isn’t available for short-term rental bookings.

Challenge 2: Calculating levy on complex booking structures

Solution:

Apply the 7.5% rate to the complete booking value including all fees charged to guests, not just the base accommodation rate.

For properties with separate cleaning fees, service charges or additional amenities, calculate the levy on the total amount guests pay, ensuring compliance with the Victorian Government’s inclusive calculation method.

Challenge 3: Managing local night cap limits across multiple platforms

Solution:

If your local council has introduced a night cap, implement centralized calendar management tracking all bookings regardless of platform, maintaining real-time counts of annual night usage to avoid exceeding caps.

Use property management software that synchronizes availability across all your short stay booking platforms and direct bookings while monitoring compliance with both statewide 180-night limits and stricter local council restrictions in affected areas.

Conclusion and Next Steps

The new short-term rental regulations represent a permanent shift in Victoria’s property market, requiring all Airbnb hosts to adapt their operations for ongoing compliance with levy obligations, any local night caps or council rules, owners corporation bylaws and registration and lodgement requirements.

To get started:

1. Assess your property status: Determine whether your properties qualify as primary residences or investment properties and document eligibility for available exemptions.

2. Prepare compliance documentation: Gather ownership records, calculate projected levy obligations and establish record-keeping systems for ongoing reporting requirements.

3. Monitor local council restrictions: Review specific requirements in your area, particularly if operating in tourism-focused regions like the Mornington Peninsula where additional restrictions may apply. This is because caps and registration schemes are currently set at council level and not by the state.

Additional Resources

For official guidance on the short stay levy, registration and lodgement, visit the State Revenue Office (SRO) of Victoria's website. Be sure to also consult your local council or its website for specific rules, registration schemes or night caps in your area. Further information on accommodation laws can be found at Consumer Affairs Victoria, while the Australian Taxation Office (ATO) provides resources on tax implications. It is highly recommended that you consult a professional tax advisor to understand how these new regulations affect your personal financial situation.

FAQs

What is the new short stay levy in Victoria and when does it start?

The short stay levy is a 7.5% tax on the total booking value of short-term rental accommodations (stays under 28 consecutive days). It came into effect on January 1, 2025.

How is the 7.5% levy calculated?

The levy is calculated on the total amount a guest pays for a booking. This includes the accommodation fee, cleaning fees, service charges and any other associated costs, but excludes credit card fees.

Who is responsible for paying the short stay levy?

Most booking platforms like Airbnb will automatically collect and remit the levy to the State Revenue Office (SRO) for bookings made through them. However, if you take direct bookings (e.g., through your own website), you are responsible for registering with the SRO, collecting the levy and lodging returns yourself.

Are there any limits on how many nights I can rent out my property?

As of 2025, there is no statewide "night cap" in Victoria. However, individual local councils have the authority to introduce their own limits on the number of nights a property can be rented out per year, especially for unhosted investment properties. You must check with your local council for any specific restrictions.

Can my apartment building ban me from offering my property for short-term rental?

Yes. From January 1, 2025, owners corporations can pass a special resolution (requiring a 75% vote) to ban short-term rentals in the building. However, this ban cannot apply to a lot that is the owner's principal place of residence.

Do I get any exemptions if I'm renting out a room in my own home?

Yes, properties that are the owner's principal place of residence receive significant advantages. They are exempt from owners corporation bans and may be treated more favorably under local council rules regarding night caps. You must be able to prove the property is your primary home.

What records do I need to keep for compliance?

You must maintain comprehensive records for both state levy obligations and your regular income tax. This includes all booking details, a breakdown of fees charged, platform transaction records and documentation proving your property's status (e.g., as a principal place of residence or an investment property).