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Hundreds of Dunedin homes rented to short-term visitors could soon be hit with a rates increase.
The Dunedin City Council is investigating how it could apply a new rating method to homes and rooms being rented out to visitors on internet services such as Airbnb.
A report prepared by the council's senior management accountant Carolyn Allan suggests a new rating category could be applied to some residential properties being used as accommodation.
There were at least 790 Dunedin properties, either the entire property or at least one room, advertised for short-term visitor accommodation during January.
Information showed about 41% of those properties were booked for fewer than 28 nights a year while 11% were booked for more than 180 nights, the report found.
Two options for how those properties could be rated will be presented to the council's rates and funding advisory panel on Tuesday.
The options included a new mixed-use rating category between residential and commercial, determined by the number of nights a property was rented for and the number of rooms available.
Under the possible changes, a property which had four bedrooms or fewer and was rented out between 29 and 128 nights would fall into the mixed-use category. Any more nights would mean it was commercially rated and any fewer it would be residential.
Other councils, including the Queenstown Lakes District Council, already have similar systems.
If the council decided to proceed with a new rating method, staff would need to refine and further develop the criteria and consider how properties would be registered, Ms Allan said.
Short-term rentals played an important role in Dunedin, particularly around major events such as the three Ed Sheeran concerts, and any possible consequences of a new rating method had to considered, she said.
Dunedin photographer Chris Sullivan rents out two spare rooms in his Mornington home and believes a targeted rate is not needed.
Unlike Queenstown and Rotorua, Dunedin was not a purely tourism-targeted destination, so residential homes provided an option not being offered in the city, Mr Sullivan said.
Before renting the rooms out, he approached the council and an accountant to make sure he was not breaking any laws or regulations.
Since the rooms were first advertised in November, they had been filled almost every night, he said.
Mr Sullivan said he understood the concerns commercial accommodation providers had, but would keep renting the rooms out as long as there were no regulations.
Otago Motel Association spokesman Neville Butcher said the association supported the council's moves to apply higher rates to those residential properties letting out rooms to short-term visitors.
Residential accommodation providers were marketed and operated exactly the same as commercial ones, but they were in a less regulated and lower-rated environment, which was unfair, Mr Butcher said.