Daylesford's peak tourism body is calling for Victorian government intervention in the short-stay accommodation market, to increase long-term rental supply.
A lack of available and affordable rental properties is preventing struggling tourism and hospitality businesses from attracting new staff to the region.
Tourism leaders say crippling staff shortages are affecting the visitor experience, with reduced business opening hours and workers under constant stress.
Daylesford Macedon Tourism chief executive Steve Wroe said he wanted the Victorian government to investigate the most effective policy options to regulate the short-stay accommodation market.
"The government needs to do some analysis on this and provide a report back to industry on what the best options are," Mr Wroe said.
A cap on the number of nights short-stay properties can be listed each year and higher rates for short-stay properties are two options that have been implemented in other states.
Byron Shire in New South Wales, which encompasses tourist hotspot Byron Bay, is introducing a 90-day cap on short-stay letting per year, in an attempt to encourage more owners to switch properties to long-term rentals.
Mayor Michael Lyon said leaders in Victorian tourist hotspots like Daylesford should learn from the situation in his shire and not "leave it too late" to regulate the short-stay property market.
"If there hasn't been a response from state government on the issue, change it yourself," he told the ABC's Conversation Hour.
Councillors against intervention
Councillors in Hepburn Shire, which includes Daylesford, voted against considering a new rates system in April, which could have seen short-term accommodation owners paying 50 per cent more than the general rate.
Mr Wroe said it made sense for the Victorian government to complete a detailed analysis and then work with local governments on the best options available.
He said whatever regulation was introduced, it must achieve a careful balance.
"If you put caps on nights for an Airbnb property or some sort of financial impost, that will decrease the supply of accommodation," Mr Wroe said.
"That means potentially the price of accommodation will go up which is a negative, but a balance does need to be achieved as the current situation is not sustainable.
"There is no simple solution, but the solution that needs to be found is one that is balanced so supply for housing for the community increases, but we are not restricting tourism by lowering the supply."
Housing struggles
Thirty-one per cent of dwellings in Daylesford were unoccupied on Census night in 2021, higher than the Victorian figure of 11 per cent.
The Ballarat and Central Highlands region, which encompasses Daylesford, had a rental vacancy rate of 1.5 per cent in July 2022, according to Real Estate Institute of Victoria data.
Three to four per cent is considered a healthy rental vacancy rate.
The Victoria Tourism Industry Council is also asking the state government to consider imposing limits on the number of days properties can be advertised on short-stay platforms.
Chief executive Felicia Mariani said Victoria was behind other states like New South Wales and Tasmania on this front.
A Victorian government spokesperson said in a statement it would review the Owners Corporations Amendment (Short-stay Accommodation Act) to investigate the "effectiveness of the legislation".
The act created laws around unruly behaviour in short-stay accommodation in 2018.
The spokesperson said initiatives like Build-to-Rent and the Affordable Housing Rental Scheme would increase access to rental homes.
