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Rates increase for BnB owners 'beggars belief' - Rotorua host
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A Rotorua bed and breakfast owner says a council plan targeting
holiday rental homes "beggars belief" as some hosts face rates
increases of 180%.
Rotorua Lakes Council says it's a "real issue" given Rotorua's housing
shortage and short-term accommodation owners needed to pay their "fair
share".
After confusion over how the policy would be applied, the council has
acknowledged it could have explained more clearly and said it has had
more than 70 queries after sending 912 letters to potentially impacted
ratepayers.
The council's draft Long-Term Plan 2024-24 proposed to charge
commercial rates to properties advertised as short-term rentals at
least 60 days per year. This previously only applied to such
properties occupied at least 100 days a year.
From July 1, hosts would also pay a business and economic development
targeted rate under the proposal.
The document estimated the changes could generate $900,000 a year for
the council. It did not include other policy criteria but the council
has clarified it was aimed at properties used solely for short-term
rentals and not homeowners renting part of their home, such as a
bedroom.
Mayor Tania Tapsell told a public meeting last month it had been
difficult to find a balance between casual hosts covering their
mortgage and those collecting "very significant profits".
Rotorua mayor Tania Tapsell speaks at the Lake Ōkāreka fire station.
(Source: Local Democracy Reporting / Laura Smith)
But Rotorua host Kerris Browne told Local Democracy Reporting she did
not believe this balance was struck.
She hosted guests in the four spare bedrooms of her family home, as
well as a detached tiny home in the backyard.
After she received a notification letter and queried the new policy,
she said she learned at a public meeting it was her tiny home that
made her property eligible for commercial rates.
Browne said the space, which had a kitchen and toilet, was occupied
for 37% of nights in the 12 months to April.
"And for that, I'm going to pay an extra $5000 a year."
Browne's property's rates would increase 103.67% to a total of
$8658.83 excluding GST. Others in the district Local Democracy
Reporting found faced a 187% rise, totalling more than $20,000 for
one.
She said being rated as a commercial property "beggars belief" and she
could not see how what she did compared to commercial premises.
"We don't mind the empty months, as this is only our top-up to help
the mortgage, not a commercial entity."
Hosts such as herself offered tourists a different experience to
motels, she said, and provided a "backup" during busy periods when
other visitor accommodation was scarce.
Rotorua's commercial short-term accommodation occupancy rates ranged
from 44.6% in July to 68.8% in January, according to the latest
Ministry of Business, Innovation, and Employment data.
If the policy went ahead, the tiny home would stay empty as she said
it was not compliant with the Residential Tenancies Act for long-term
living, and a full-time renter would mean too much noise, mess and
lost privacy for her family. She said she believed many hosts would be
in the same situation.
Browne said the homes should be assessed case-by-case, such as through
a resource consent process.
## 'Question of fairness and equity'
Rotorua Lakes Council corporate services group manager Thomas Collé.
(Source: Local Democracy Reporting / Laura Smith)
Council corporate service group manager Thomas Collé said council
research found more than 1000 properties in the district were
advertised for short-term accommodation, down from 1200-1300 prior to
the pandemic.
"[The proposal] raises the question of fairness and equity and whether
owners of properties offering short-term accommodation are paying
their fair share towards the district and tourism promotion compared
to traditional accommodation providers like motels, hotels and
campgrounds."
He said they benefited from tourism marketing of Rotorua funded by
commercial rates.
Collé said 30, 60 and 90 advertised days were considered for the
proposal.
"We also looked at what other councils are doing. For instance,
Queenstown has a voluntary registration system and applies different
rates based on how properties are used."
He said the proposal intended to find a fair approach to distinguish
between homes used mostly for family living but occasionally
advertised for short stays, and those solely used for commercial
purposes.
"Homeowners that rent only part of their home, like one room, won't be
included and were never intended to be.
"But those using properties solely for short-term rentals would be
treated as commercial…"
Kerris Browne's tiny home visitor rental in her backyard. (Source:
Supplied)
He said ratepayers who received a letter about the economic
development rate and did not believe they fit the criteria should
contact the council.
As of Friday, it was dealing with 70 enquiries.
"We have a high degree of confidence in the 912 letters sent but
expect it may ultimately be fewer as we receive more information from
property owners."
Local Democracy Reporting asked why the draft plan did not include
more detail about how the policy would be applied and to who.
Collé said the consultation document was intended to provide a summary
of proposals, but accepted it could have been clearer.
"Property owners who received letters were invited to an information
session regarding the proposal which enabled us to provide more
detail.
"They have the opportunity to discuss their situation with us so that
we can confirm with them whether the proposed rate would apply to
them."
If the policy was adopted the rating information database (RID) for
all properties in the district will be updated by June 30.
This database will determine whether a property is residential or
commercial for the following year, effective from July 1.
If a property owner stops providing short-term accommodation during
the year, their rate cannot be reset until the next update.
Once a rate is set, it cannot be adjusted unless there was an error.
If the proposed policy is adopted and ratepayers plan to stop
providing short-term accommodation before July 1, they will need to
notify the council before July 1.
Consultation on the draft plan ends on May 10.
**Local Democracy Reporting is local-body journalism co-funded by RNZ
and NZ On Air.**
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