Local governments, states and countries around the world are introducing new restrictions on short-stay rental providers like Airbnb, with one American city taking drastic action.

New York City has banned people from renting out their entire homes to people for less than 30 days, and hosts must register their rental, share the apartment for the duration of the stay and only allow a maximum of two guests per stay, resulting in dwindling bookings.

The New York moves follows decision by some Australian councils to try and curb short stay rentals.

The City of Melbourne Council voted last month to introduce a cap on bookings — floated as 180 days by Lord Mayor Sally Capp — and annual registration fees for hosts of short-stay rentals, joining other local government areas like Hobart, Byron and Noosa who have previously done the same.

Michael Fotheringham, director of the Australian Housing and Urban Research Institute, said the City of Melbourne Council’s decision to implement an annual registration fee and a limit on bookable days for Airbnb hosts is a “very light touch.”

“In international terms and even Australian terms, they aren’t particularly strong, but it’s a toe in the water and a start,” he said.

“This is an unregulated and uncontrolled market that is removing property from our rental market.”

High-density prices

In the City of Melbourne, 14 per cent of residential properties, around 4100 dwellings, are actively used as short-term rentals, with almost half rented out for over 90 days each year while the rental vacancy rate sits at just 0.8 per cent.

The rental vacancy in the City of Melbourne LGA is just 0.8 per cent. Photo: Getty

Peize Li, a PHD student at Melbourne University, told The New Daily she has been studying the effects of short-stay rentals on the housing market in Victoria.

“My research, although not published, shows a significant association between the density of short-term rentals and the rental price at the neighbourhood level,” she said.

“The density of short-term rentals is the number of total Airbnbs in a suburb divided by the total dwellings in the area.”

She said a cap on days listed on Airbnb will have a much bigger effect on the short-term rental market in Melbourne than the registration fees.

“If the host had to pay extra fees, that just adds up to the operating cost of running the Airbnb,” she said.

“The caps on listing days would be a game changer because if the maximum is 180 days, then the short-term rental won’t be a higher profit alternative to long-term rentals.”

Further regulation

The City of Melbourne’s move to further tax and limit Airbnb use isn’t revolutionary, but Dr Fotheringham said in contrast with the hotel industry, short-stay rentals aren’t properly regulated.

“This is a really simple initial step that’s being floated, I wouldn’t be surprised if ends up going further than this,” he said.

“The rates being paid by these property owners are residential rates rather than commercial rates, but it’s no longer residential use, it is commercial use.”

He said the federal government doesn’t have a clear mechanism for regulating the industry, so it is up to the state governments to do so.

“The measures described this week aren’t going to radically change the market or drive investors out of Airbnb and back into the long-term market,” he said.

“There’s a growing awareness that renting in Australia has become really problematic with the lack of supply and affordability pressures, so anything we can do that makes a positive difference to our rental stock should be welcomed.”

More action is needed to solve the housing and rental crisis. Photo: AAP

A Victorian government task force is currently examining housing supply, alongside state-wide caps and taxes on the short-stay rental industry, although Ms Li suggests it would be better to use targeted regulation instead.

“If we impose citywide regulation on the maximum days on Airbnb, that will affect some hosts in those areas that short-term rentals are not currently having a very big impact on rental prices,” she said.

“I hope that they can refine these kinds of regulations so that it can accurately target high-impact areas rather than low-impact areas.”