Owners of investment properties in one of Queensland’s most stressed housing markets are set to be charged more in council rates from next year.

Cairns Regional Council has unveiled a plan to introduce a new rating category for properties that are not used as a primary place of residence from financial year 2023-24.

The council said the move would bring it in line with other regional centers such as Townsville, Noosa and the Sunshine Coast.

Cairns is in the grip of a housing crisis, with rental vacancy rates below 0.6%, less than 300 properties advertised for rent.

Rental market fears

Sally Watson, executive director of nonprofit Shelter Housing Action Cairns, said she would welcome higher rates charged to owners of short-term accommodation, but warned that investment disincentives on the rental market would be “a disaster”.

“I really urge the council, when filling out the details of this policy, to be aware of the housing crisis and to be aware that they do not want to see a reduction in rental properties as a result of this policy position, ” she says.

Cairns Regional Council intends to charge differential rates on properties which are not used as the owner’s primary residence.(ABC Far North: Brendan Mounter)

Jackson Hills, head of policy and strategic engagement at Queensland Shelter, said local councils were to be commended for looking at ways to better regulate short-term accommodation, but stressed that it was important to “find the right balance”.

Tom Quaid, Cairns area chairman for the Real Estate Institute of Queensland, said the flow effects depended on how big the rate hike was.

“Whether [council] can justify the resulting money going back into property and housing, so I think that will be much more palatable to taxpayers and help to do something to improve the situation we have,” said Mr. Quaid said.

The council’s chief financial officer, Lisa Whitton, said the council will spend the next 12 months on a “significant amount of work” to prepare for the change, including engaging with affected owners.

“Everything needs to be checked.”

Move towards “equity”

Brisbane City Council announced this month that it will charge higher rates to landlords who rent out their properties for short stays, such as Airbnb accommodations.

Lisa Whitton of Cairns Regional Council said the housing crisis was not the main motivation behind her proposed new rating category.

“It’s a potential benefit or impact, but it’s mostly about that fairness and fairness in our rating structure,” Ms. Whitton said.

However, Mr Quaid said landlords who had not recently increased their rents would likely seek to do so ‘just to offset those extra costs’.

A boardroom, with many people seated at their assigned desks.
Cairns Council will also start charging rates separately on flats, townhouses and duplexes that share a title deed.(ABC News: Curtis Rodda)

Council has already decided in its 2022-23 budget, passed Wednesday, to remove rate discounts for properties with a property value of $500,000 or more.

The changes mean that 27% of ratepayers in Cairns will pay less fares than the previous year, while nearly a quarter will face a higher fare increase than the average 3.1% hike.

The council will also start charging separately for flats, townhouses and duplexes that share a title deed, affecting around 1,400 homes.