The proposal has been on the cards since December 2020 as a way of addressing pressure in the Hobart residential rental market, which has seen prices increase 8.7 per cent in a year while the vacancy rate is just 0.4 per cent.

In the meantime, short-stay conversions have been flowing in.

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So far this year, the City of Hobart has approved 57 out of 81 applications, the majority of these being whole-of-dwelling. It brought the total number in the city to about 480.

The council has become the first in Tasmania to attempt such a broad restriction on new Airbnbs, but it will not apply to existing listings, while new whole-of-property listings can still occur in non-residential zones.

It once again prompted debate among councillors, this time at the Monday evening meeting where it passed 6-2.

The Tasmanian Planning Commission will have three months to decide if the proposal complies with the state's planning laws.

While some councillors argued it was beyond time for Hobart to use any levers it has to slow the amount of new Airbnb listings, others saw unintended consequences.

Central to this was a view that those who already have a short-stay listing would get an unfair advantage, which was against the intent of the proposal. Tasmanian law stops councils from making such moves retrospective.

Alderman Simon Behrakis said it would not result in more housing in the rental market.

"If anything, it's going to increase the values and just ensure that the properties that have a short-stay permit attached to them are always going to have that short-stay permit attached to them because nobody in their right mind would get rid of something quite so valuable," he said.

Regulation of short-stay was largely left to councils after the state government's latest round of reforms in 2019 that required booking platforms to share information.

Hobart mayor Anna Reynolds said councils had limited options, but they needed to do something to prevent further inroads being made into the rental market.

"We aren't alone in terms of cities having to deal with this trend, but unfortunately we have been left to deal with this alone here in Hobart," she said.

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"Without taking action, we were stuck implementing lax and poorly considered rules set by the state government.

"This is a very balanced approach.

"It was the recommended path of action by both the premier and planning minister when they weren't willing to take steps themselves, and we are following this advice."

The council received 118 submission on the policy, the majority of which were opposed.

While Hobart goes it alone, other councils will be looking to the outcome of a Local Government Association of Tasmania review of differential rates proposals.

Alderman Jeff Briscoe believed this would be a better approach, giving property owners more of an incentive to list them for long-term rent, rather than short-stay accommodation. He described this as a "carrot", while a ban would be a "stick".

Break O'Day Council brought forward the idea, foreshadowing potential issues unless something was done. The East Coast region is known for its shacks, and the council did not want to target owners for listing these when they're not using them.

Instead, mayor Mick Tucker said it was the full-time listings that could be subject to differential rates.

"A full-time listing is a commercial business, that should probably be considered for differential rating," he said.

Finding that balance would be a challenge however, and could require legislative changes by the state government.

"If you introduce differential rates, is it for someone doing putting it up for a certain number of weeks of the year? And if it's come out of the rental market?" Cr Tucker said. "We don't want to come in as a council that's heavy handed, unfair or inequitable."

In terms of housing supply, the council wanted state government assistance to get more land released, particularly for community housing.

As a tourist region with rapidly increasing property values, finding the balance between local community need, owners' rights and tourism was paramount for Break O'Day.

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Elsewhere in the state, the issue is on the backburner.

Devonport mayor Annette Rockliff said the council did not have a position on short-stay and it had not been raised much, while Waratah-Wynyard mayor Robby Walsh said the growth in subdivisions around Wynyard should help to stave off the worsening housing crisis.

In Launceston, 24 change of use to visitor accommodation were issued in 2020-21 - a significant drop from previous years.

Acting mayor Danny Gibson said the council was monitoring movements in the area, but no policies were being proposed.

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