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A local government move to designate short-stay rentals as commercial properties has raised questions over whether such properties should be treated as businesses. The City of Mount Gambier, in the South Australia's South East, has proposed designating short-term accommodation properties as commercial properties, rather than residential. It would mean a steep rate rise for owners if the changes passed, with commercial rates to be set at 250 per cent of residential properties at the start of the 2026–27 financial year. This would fall to 200 per cent across the next three years as part of a wider move to lower rates for businesses in the town. Council corporate and regulatory services general manager Jane Fetherstonhaugh said it was a fair way to recognise the properties' profit-earning ability. "They generate income and place higher demand on infrastructure and social services, similar to any hotel or motel. "This change just ensures some fairness on how rates are applied across those different types of accommodation providers." The commercial rate would only apply to properties rented out for more than half the year and where more than 50 per cent of the property was used for short-stay accommodation. "We don't think it's going to impact the tourism sector," Ms Fetherstonhaugh said. The council's proposed changes are open for public consultation. 'Money grab' Short-stay rental owner Jenny Bickley said the proposal would result in increased costs for owners, which would be passed on to customers. She said the move was a "money grab". "You don't make that much money and you have to put your prices up straight away and that's going to negatively affect all the tourism we have." Ms Bickley said council's reasoning that short-term rentals were making a profit was unfair. "I've run my business here in Mount Gambier for 30-plus years and I have worked from home the entire time and made money working from home," she said. "Why is short-term targeted and not just anybody who is earning an income from a home?" Consistency sought The Adelaide and Unley councils in South Australia and Brisbane City Council in Queensland have made similar changes to their rating structure. Earlier this year, an SA parliamentary inquiry into the short-stay sector recommended compiling a comprehensive list of all short-stay rentals in the state. Local Government Association of South Australia metropolitan committee chair Moira Were said it was a welcome move that would help councils set rules for the sector. "What we're looking at here is people who are using their properties as a permanent form of income," she said. "If that is the case, even if it's just seasonal, councils want to know what's going on. Short Term Accommodation Association of Australia executive director Keiran Craig-Jones said she was supportive of a comprehensive register of properties. She said councils classing short-stay rentals as businesses was another example of inconsistent rules for owners. "It's not about it being fair or not, it's about the inconsistency in how our industry is currently being classified and defined," Ms Craig-Jones said. "If you look at the terminology or class we're defined as at a local government area versus state and federally, it's completely different. "It just causes confusion."
