Beware of Holiday Rental Snags
There are implications around renting out a property for short-term visitor accommodation, warns Alice Balme.
1 December 2022
With domestic and international tourism picking up again in New Zealand and the summer holidays just around the corner, you may be thinking about renting your home or bach for short-term stays through an online platform such as Airbnb or Bookabach.
Before you do, there are several implications around renting out a property for short-term visitor accommodation you need to consider.
Some councils around the country have rules in their district plans that apply to visitor accommodation and short-term rentals, which may mean you need to obtain a resource consent if you breach these rules.
For example, in most residential zones in the Queenstown Lakes District you must notify the Queenstown Lakes District Council if you wish to use your house for residential visitor accommodation and keep records of the rental activities. A resource consent will generally be required if providing visitor accommodation for up to 90 days a year. Renting out your home for more than 90 days a year will also require resource consent, which may be more difficult to obtain.
In most residential areas in the Thames-Coromandel District, visitor accommodation (which means a building used as visitor accommodation for less than 50 days per year) can be a permitted activity under the District Plan, provided there are no more than 12 guests staying at any one time, and the accommodation is an existing house or accessory building. If you don’t comply with these standards a resource consent will be required.
Every council’s rules are different, so it’s best to contact your local council to find out which rules apply to your property before going merrily ahead and listing it as short-term rental accommodation.
The cost to obtain a resource consent can be substantial and you may need to obtain consent from your neighbours as part of this process.
‘The cost to obtain a resource consent can be substantial and you may need consent from neighbours’
WATCH THE RATES
What you use your property for could also affect your rates payments. Under the Local Government (Rating) Act 2002, councils can set rates based on different uses of land and activities. To avoid any surprise increase in your rates, check with your council whether using your home for visitor accommodation could mean an increase to your rates bill.
Changing the use of your home for visitor accommodation could also trigger additional responsibilities under the Building Act 2004. A change in use from a residential home to visitor accommodation may mean you are required to provide access, parking and sanitary facilities for people with disabilities. Again, we suggest you contact your local council to confirm whether using your property as visitor accommodation would require a change of use under the Act.
The most important insurance message is this: don’t assume your current insurance covers short-term letting. Most standard house/holiday home policies tend to
cover damage caused by guests staying with you, whether they are paying or not. But if the whole house is being rented short-term, insurers will probably not consider the paid customers to be your guests. Policies are varied, and there are no generic rules that apply across the market. Most holiday home insurers seem happy to insure short term rentals (for a higher premium than standard holiday home cover), but no insurer will retrospectively apply cover if it wasn’t in place when the damage was caused. So again, it is important to talk to your broker/insurer before listing your property online for short-term stays.
You will need to consider tax implications associated with the use of your property for visitor accommodation, and how the brightline rules will apply. As always, we
recommend you seek specialist accounting and tax advice before you choose to shift from using it solely as your home or family bach to providing short-stay accommodation.
While short-term rentals certainly can be a good way to get the most out of your property, it’s not all plain sailing. Before you press ahead with that listing, ensure you know what the rules actually are, then think again before you forge ahead.