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A report prepared by the Dunedin City Council's senior management accountant, Carolyn Allan, suggests a new rating category could be applied to some residential properties being used as short-term accommodation.
Two options for how those properties could be rated was presented to the council's rates and funding advisory panel yesterday, but councillors felt the issue needed to be better understood before any option could be adopted.
Cr Kate Wilson said she had heard reports of student flats being used for short-term accommodation instead, which showed more information was needed about what effect they were having on the city.
Mayor Dave Cull said the council needed to be careful not to focus just on the rating system when there were other potential issues concerning the properties, such as health and safety regulations.
``We might solve the financial situation but we could also miss some other pretty important issues.''
Chairman Mike Lord suggested issues such a tax and health and safety were outside the council's remit and the council did not want to be too harsh and ruin the city's reputation as being welcoming to visitors.
But Mr Cull said Dunedin's reputation could be tarnished if there was a event in which people were injured or killed while staying in a short-term rental.
Cr Aaron Hawkins said the council also had to investigate any effect the properties were having on the city's housing supply.
The panel voted to have council staff report back at its next meeting with more information on the effect short-term rentals were having on the city.