New rating system proposed

Many residential property owners may stop providing Airbnb accommodation in the city if the Dunedin City Council decides to implement a new rating method for short-term visitor accommodation (STVA), a Mornington operator says.

The council will consider a new rating method for residential properties which are being used for STVA, during a council meeting tomorrow.

The proposal is an attempt to make rates fairer between STVA providers such as  Airbnb and Bookabach, and traditional accommodation providers such as hotels and motels.

Traditional accommodation providers pay higher commercial rates, but in most cases residential STVA providers pay residential rates.

All STVA providers also receive a benefit from council’s spending on marketing and economic development activities.

The proposal will be discussed at a council meeting tomorrow and, if approved, would come into effect from July 1, 2020.

Following a request by the council, the Rates and Funding Advisory Panel investigated alternative options for rating residential properties providing STVA.

In a report to the council, the panel has recommended a new differential category be established for residential properties where the entire residence, or separately used or inhabited part (SUIP) of a residential property, is used for STVA.

"For rating purposes, residential STVA properties will be defined as all residential properties with four bedrooms or less, where the entire property or an entire SUIP is used for short-term visitor accommodation; and it has a daily tariff; and it is booked/let for more than a designated number of nights per year."

In order to assess a rate for STVAs, it would be necessary to collect information from each STVA property owner about how many nights their property is booked each year.

"The assessment of booked nights would be based on the number of booked nights for the previous calendar year (January 1 to December 31)."Where historic information is not available, say in the first year of operation, forecast booked nights would be used.

"This information would be gathered through an annual declaration from STVA property owners," the report said.

Mornington resident and Airbnb operator Chris Sullivan believed it would put a lot of people off providing Airbnb or Bookabach accommodation.

He said some providers could earn up to $30,000 per year, after tax.

They would be hardest hit if the council decided to raise their rates.

"The anecdotal evidence in Auckland is, some people are getting $4000-$5000 rises in their rates bills, which is putting them off.

"If my rates rose that much, it wouldn’t be worthwhile.

"There’s not a huge amount of money to be gained in it, to be honest. For the amount of hours you put into it ..."

He was interested to see what rating model the council comes up with.

Otago Motel Association president Alex Greenan was delighted the issue was about to be debated by the council.

"It’s a step in the right direction.

"From our perspective, to get a level playing field would be a fantastic thing. It’s all we’ve ever asked for."

Council staff have begun identifying properties that may be operating as STVAs in Dunedin.

The identification process involves searching websites, particularly online booking sites such as Airbnb and Bookabach, and working with interested parties to identify properties.

A list of 230 residential properties has been compiled so far.Another 91 properties are "unconfirmed" and will require further investigation, the report showed.

john.lewis@odt.co.nz