A radical proposal to tax “desirable” spare bedrooms has set off a firestorm among Australians and rightly so.

The idea, floated at last week’s Economic Reform Roundtable, suggests households with more rooms than they “need” should be hit with higher taxes to free up housing stock. Treasurer Jim Chalmers refused to rule it out, leaving Aussies wondering if this is a genuine policy option.

Let’s be clear: this isn’t housing reform. It’s a political grenade that distracts from the real issues driving the crisis.

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The Public Backlash

The reaction was swift. Social feeds filled with anger:

• “What about families who need a spare room for relatives visiting from interstate?”
• “Have you seen the size of new 3 and 4 bedroom houses? The extra ‘bedrooms’ are glorified cupboards.”

Even economists have warned it would be political suicide. AMP’s Shane Oliver said bluntly: “That would cause a huge backlash politically as people often maintain spare bedrooms for visitors and it would be seen as a huge attack on empty nesters.”

And he’s right. Spare rooms aren’t symbols of greed. They’re part of how Australians live whether it’s caring for grandkids, setting up a home office, or simply having enough space not to be crammed in.

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The Real Problem: Supply, Not Spare Rooms

Yes, there’s a mismatch. More than 60 per cent of households are one or two people, while three-quarters of homes have at least three bedrooms. But that doesn’t mean taxing empty rooms will fix it.

The real issue is supply. We are 200,000 to 300,000 dwellings short, according to industry estimates. Developers are stuck building what financiers will fund larger homes and luxury apartments while affordable one and two bedroom options are still scarce.

Builders know the answer isn’t squeezing existing homeowners. It’s making it viable to deliver diverse new housing stock: apartments, townhouses, medium-density projects, prefab solutions.

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Policy Should Enable, Not Punish

Instead of punishing households, government should:

• Remove stamp duty to make downsizing affordable.
• Back developers with guarantees on pre-sales so smaller apartments actually stack up.
• Cut red and green tape that holds up land releases and new projects.
• Support innovation in prefab and modular to slash costs and speed up builds.

That’s how you free up housing and give younger families a shot. Not by taxing Grandma’s spare room.

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The Good Builder Take

Australians are right to be outraged. A spare bedroom tax is a lazy idea that punishes lifestyle choices without adding a single new dwelling to the market.

Housing policy must be about building more homes and building the right homes. Builders, developers, and governments know what needs to happen: unlock supply, diversify housing types, and make it easier not harder for people to move through the market.

We don’t need taxes on bedrooms. We need policies that build the future.