Air BnB, Bookabach and other types of short-term rentals are gaining in popularity for people seeking to get better returns on their property investments.
Around 300 rooms or homes are advertised for short-term rental at any one time, according to the Marlborough District Council, including rooms within a residence or whole houses and holiday homes.
Local councils want to see national regulations put in place, but at the moment, it’s up to each council to apply their own rules.
According to the Marlborough District Council, short-term rentals are considered to be homestays, unless there are more than five guests. Then it’s visitor accommodation and different rules apply.
So, if you’re considering, or are, renting out your property on a short-term basis, here’s what you should keep in mind:
- If you’re renting out your holiday home or a room in your home and there are five guests or fewer, then you’re considered a homestay.
Check that a homestay is a ‘permitted activity’ in your area and meets the required standards. If not, you need to have a resource consent, so it could pay to talk to the council.
- If your short-term rental is your holiday home and there are likely to be more than five people staying at any one time, then it’s considered to be visitor accommodation,
- When it comes to rates, the council has different rules however. Homestays have a ‘residential rural differential’ rate applied.
However, if the accommodation caters for six or more guests (otherwise defined as visitor accommodation), and is operated from a residence, then the whole residence is based on the homestay differential as above.
It would pay to talk with the council regarding your rates, because there are many factors they take into consideration before deciding which rate would apply to your situation.
- Whether described as homestay or visitor accommodation, live in or living separately from your guests, all short-term rentals are charged an annual tourism fee, which is paid to Destination Marlborough to assist in promoting Marlborough as a tourist destination.
When it comes to taxes, the rules are pretty straight forward:
- You have to pay tax if you earn money from providing short-term accommodation.
However, you can also deduct your costs, such as interest on mortgages, rates, insurance, maintenance etc. If it’s your own accommodation as well, then your costs are apportioned.
It’s a good idea to talk to your financial advisor regarding how you set up your short-term rental, whether it’s through AirBnB, Bookabach etc, or individually.
“Aside from short term rentals, demand for long term residential accommodation remains very strong,” says Mariette Knudsen, who heads First National Marlborough Property Management division.
“We have qualified, quality tenants waiting for properties, and are always happy to sit down with investors and discuss rental investment options with them,” says Mariette.
This might look a little daunting, but with the right advice, you can get the most out of your investment, and when it comes to buying the right type of property for short-term renting, or if you are considering a residential rental investment, First National Marlborough are happy to assist with advice, sourcing a property, or professional management of your property.