'Cap and Trade' for Rentals Proposed

7/3/2024

A new report from property reform advocacy group Grounded proposes a "cap and trade" system for short-term rental (STR) permits as a solution between balancing the need for short-term and long-term housing. The report analyzed the impact of STRs in 13 tourism markets across Australia. "Across 12,000 units, we saw that for returns of STRs, operators were earning 81% more than they could in the traditional rental market," Grounded Managing Director Karl Fitzgerald said, explaining the popularity of STRs from the owners' perspective. The proposed solution would slowly return hundreds of thousands of properties to the long-term rental market and still retain the profitability of STRs. "We're advocating for a cap on the number of Airbnbs and creating a licensing system that provides some sort of regulation," Fitzgerald explained. Once the system was established, the licenses could be auctioned. If the number was kept stable or reduced over time, the value of the licenses would theoretically rise. In turn, any system that increases the cost of running a short-term rental would mean less attractive returns, particularly for marginal and more affordable properties.

Australian Broadcasting Corporation (06/26/24) Daniel Ziffer