Has the sun set on holiday rentals?
Tuesday 11 December 2018
With all the talk of increased council rates and compliance for short term rentals, do they still make investment sense? This month NZ Property Investor magazine investigates.
By The Landlord
Low rental yields and high entry price points across the country mean short-term holiday rentals look like a lucrative investment opportunity for residential investors.
But moves to tax profits on holiday rentals are becoming more and more frequent due to shortages in long-term rentals for locals and pressure on infrastructure.
Councils across the country have introduced, or are looking to introduce increased rates for short-term rental providers.
Yet, in spite of this the number of available properties in New Zealand, currently sitting at around 50,000, is still growing.
In Auckland the number of entire homes available for short-term stays has sky-rocketed from 694 listings in October 2015 to 3,840 in October 2018, according to AirDNA.
However, the percentage increase has slowed since Auckland Council introduced an Accommodation Provider Targeted Rate (APTR) for web-based holiday accommodation listings last year.
The APTR is applied to properties that book more than 135 nights a year (rated as businesses); those that book between 29 and 135 nights will be rated 75% commercial.
In Queenstown and Rotorua commercial rates are currently imposed on short-term rental accommodation providers under similar structures.
Other councils including Tauranga, Christchurch and Westland are poised to introduce similar systems.
In Queenstown a resource consent is required for some short-term accommodation; and a “bed tax”, which is a user-pays system is also being explored in both Auckland and Queenstown.
Infometrics senior economist Benje Patterson says there are several district plans currently under review, and we’ll get more detail as they are finalised.
So does short-term rental accommodation still make sense for investors? And, if so, where?
To find out more about how to make the short-term rental market work for you, click here to get the digital issue of NZ Property Investor magazine.
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