LG Alert - Rating Short Term Accommodation - Let’s get the record straight!

16 May 2024

The rating of properties used to provide short term accommodation (think AirbnB or similar) has been a hot topic of late. This is particularly following recent media reports about the proposal by the City of Adelaide, as set out in the Council’s draft annual business plan.

In the context of discussions around this,  we have heard a number of conflicting views regarding the legality of the approach to rating short term accommodation at a higher amount compared to the rate for residential premises.

Accordingly, we take the opportunity to confirm the position for the benefit of all our clients.

There is a limited legal basis to impose higher differential rates for properties predominantly used for short-term accommodation, compared to properties with a residential land use. The ability to do so requires a council to adopt differential rates on the basis of land use, where a commercial land use can be attributed to properties predominantly used for short-term accommodation as follows:

1. the imposition of general rates on the differential basis of land use must occur in accordance with the Local Government Act 1999 (the Act) and the Local Government (General) Regulations 2013  (the Regulations). Regulation 14 of the Regulations prescribes the land uses that are permissible differentiating factors, which, relevantly, include:

    1. residential comprising the use of land for a detached dwelling, group dwelling, multiple dwelling, residential flat building, row dwelling or semi-detached dwelling within the meaning of a prescribed instrument;
    2. commercial—shop comprising the use of land for a shop within the meaning of a prescribed instrument;
    3. commercial—office comprising the use of land for an office within the meaning of a prescribed instrument;  and
    4. commercial—other comprising any other commercial use of land not referred to in the categories specified in paragraph (b) or (c);

The ‘prescribed instrument’ (as referred to at a. b. and c. above) is the Development Regulations 2008 or the Planning and Design Code under the Planning, Development and Infrastructure Act 2016;

2. the Planning and Design Code now, separately, recognises a land use for ‘tourist accommodation as distinct from a residential land use within the meaning of regulation 14(1)(a) of the Regulations. The definition of ‘tourist accommodation’ is ‘premises in which temporary or short-term accommodation is provided to travellers on a commercial basis’;

3. accordingly, where a council has evidence to support that land is being predominantly used for tourist accommodation, namely for short-stays on a commercial basis and this is the dominant land use, the Council can reasonably attribute a ‘commercial-other’ land use to that land;

4. the relevant practical consideration is obtaining the evidence required to support the attribution determined by a council. This might include evidence of the land being advertised on Airbnb and similar platforms and/or observations/statements from witnesses. In the event of any uncertainty, a council can also request that the principal ratepayer provide information regarding how the land is used.

If you have any questions, please do not hesitate to contact Cimon Burke on 08 8113 7105 or cburke@kelledyjones.com.au  or Michael Kelledy on 8113 7103 or mkelledy@kelledyjones.com.au