According to ABC News, the Community Housing Industry Association NSW has pitched a 7.5 per cent levy on short-stay rentals like Airbnb and Stayz, alongside land tax reform, to raise $26 billion over the next decade for social and affordable housing. The peak body says the measures could support around 50,000 new homes by 2050, as the state's social housing waiting list has swollen to 72,000 households — a figure CHIA NSW CEO Luke Achterstraat describes as an "all-time record".
The Proposal in Detail
CHIA NSW's package, analysed by the Labor-aligned McKell Institute, centres on two revenue levers. The short-stay levy — mirroring a scheme already running in Victoria — would raise an estimated $135 million annually, according to ABC News. A larger land tax overhaul would lift rates from 1.6 per cent to 2 per cent, and from 2 per cent to 2.5 per cent for bigger landholdings, with a new 2.9 per cent tier introduced for holdings above $50 million. The $1.075 million tax-free threshold and family home exemption would stay in place, and the combined land tax changes are projected to bring in $25.9 billion over ten years.
Related reading: REAStats suburb clearance rates and market data.
A third element — a windfall charge on land value gains triggered by rezoning — would add a further $80 million a year, with Achterstraat arguing the revenue should fund "a long-term investment pipeline" rather than one-off grants. He was careful to frame the suite as options rather than a finished reform package, telling the ABC the industry wanted to make "a constructive contribution" ahead of today's presentation at NSW Parliament.
The timing is pointed. NSW Housing Minister Rose Jackson confirmed the government is already investing $6.6 billion to build tens of thousands of social and affordable homes, including 8,400 new public dwellings that will remain in public ownership "for generations". But Shadow Housing Minister Chris Rath countered that Labor is 40 per cent behind its National Housing Accord target of 377,000 new homes by 2029, and that the waitlist has grown from 55,000 to 72,000 households under the current government's watch.
Why the Waitlist Number Matters
A jump from 55,000 to 72,000 households on the NSW social housing waitlist is not a rounding error — it is a structural signal that supply has fallen well behind demand even as billions in public money flow into new builds. CHIA NSW's framing, that funding needs to be "turbocharged" rather than simply maintained, reflects a sector view that existing programs are running against a widening gap rather than closing it. This matters for the private market too: waitlist pressure of this scale typically generates sustained rental demand across the private sector, which can influence yield dynamics across residential property cycles.
The political split over the levy is also instructive. NSW Greens housing spokesperson Jenny Leong said the government needed to look at rent controls instead, describing a levy as a distraction from solutions such as bans or caps set by local councils. "We need investment in public housing, we need government support for genuinely affordable community housing, we need a crackdown on those seeking to profit from the housing crisis," she told the ABC. That is a materially different critique from the industry's own concern, voiced by Australia and New Zealand Short Term Rental Association chair Yoav Tourel, who said "raising revenue and delivering additional homes are two different outcomes." Both camps agree the levy alone will not solve supply — they diverge on whether it should exist at all.
For property investors and landlords watching from outside the social housing sector, the proposal is a reminder that state governments are actively testing new tax levers on property-adjacent income streams. The Victorian short-stay levy already in force provides a working template, and NSW adopting a similar approach suggests state housing bodies are converging on comparable fiscal tools rather than experimenting independently.
CHIA NSW's land tax proposal sits within a long-running debate over how state governments extract revenue from property without disturbing the family home exemption or the existing tax-free threshold. Readers wanting the mechanics of how holding costs, thresholds and aggregation rules work across different asset classes can consult APF's Capital Gains Tax on Australian Property guide, which covers how land tax interacts with disposal timing and investment structuring for landholders above the family home.
The proposed tiered structure — retaining the $1.075 million threshold whilst adding new bands at the top end — would raise revenue from larger landholdings without touching owner-occupiers. The CHIA proposal is notable for explicitly ring-fencing new revenue for community housing rather than general consolidated revenue, a structural choice aimed at insulating the funding from the "funding cliffs" Achterstraat says have plagued the sector historically.
What This Means for Investors and Short-Stay Operators
For owners currently operating Airbnb or Stayz properties in NSW, a 7.5 per cent levy — if adopted — would directly compress net yield on short-stay income, mirroring the cost already borne by Victorian operators under that state's scheme. Investors weighing a switch from short-stay to standard long-term tenancy, or vice versa, should model both scenarios against current rental yields rather than relying on historical short-stay returns, which predate any levy.
The gap between CHIA NSW's $26 billion ten-year funding ask and the government's existing $6.6 billion commitment underscores how large the shortfall in social housing investment has become relative to the record 72,000-household waitlist — a divergence that is likely to keep land tax and short-stay levy reform on the NSW political agenda regardless of which party holds government.
Landholders with larger portfolios should also note the proposed new 2.9 per cent land tax tier for holdings above $50 million — a threshold that would only affect institutional or very large private holders, but which signals state governments are willing to introduce new high-end brackets rather than simply lifting existing rates uniformly. Investors with diversified residential portfolios approaching aggregated thresholds should review their structuring now. Those assessing borrowing capacity against future holding costs may find APF's Australian Property Statistics guide useful for benchmarking current settings, whilst buyers using smaller deposits to enter the market can review the trade-offs in LMI vs Family Guarantee.
Ultimately, nothing in this proposal is law yet — CHIA NSW has stressed its ideas are options for government to consider, not a finished reform package, and Minister Jackson has only committed to reviewing the short-stay framework "in due course". But the scale of the funding ask, set against a record waitlist, makes this a live policy risk for anyone holding short-stay or large residential portfolios in NSW over the next parliamentary term.
Further reading
This article was produced with AI assistance and reviewed for accuracy. Content is for informational purposes only and does not constitute financial or property investment advice.
