Australian Research Group Floats Tax On Spare Bedrooms

A new idea to tackle Australia’s housing shortage is sparking heated debate: a proposed tax on spare bedrooms.

The concept, raised by property researchers, is aimed at addressing what they describe as a serious mismatch between the types of homes being built and the way Australians are actually living. The federal government has already set an ambitious goal to build 1.2 million new dwellings in the next four years. But critics say simply building more houses will not solve the problem if the supply doesn’t match the demand.

Fresh data shows that over 60 percent of Australian households are made up of just one or two people. Yet the majority of homes being built have three or more bedrooms, designed for larger families. That imbalance has raised questions about whether Australia’s housing system is meeting the needs of its residents during a time of record-high rents, housing shortages, and worsening affordability.

Cotality, a property research group, highlighted the problem in new findings. Head of research Eliza Owen described it as a “stark mismatch.” She noted that, according to the 2021 Census, more than 1.3 million two-person households live in three-bedroom homes — a number greater than the households with three or four residents in similar properties. Meanwhile, one-person households account for over a quarter of homes, but one-bedroom or studio apartments make up just six percent of available housing.

Owen explained that there are reasons people choose larger homes. Extra bedrooms can serve as home offices, space for hobbies, or a room for visiting family. Many couples without children may also be planning to expand their families in the future. But even with those considerations, she argued, the imbalance is too big to ignore.

Her solution? “Governments could make it more expensive to have more housing than you need, and cheaper to live in smaller housing,” she told ABC Radio. In other words, households with unused bedrooms could face higher costs, a move that would push people toward smaller, better-fitting homes.

The idea, already being called a “spare room tax,” is controversial. Critics worry it could penalize older Australians who want to stay in the homes where they raised families, or unfairly pressure people who use extra space for work or caregiving. Supporters argue that bold reforms are needed to free up housing stock and make it easier for younger Australians to find affordable homes.