Dunedin, New Zealand Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Dunedin, New Zealand?

Short-term rentals through booking platforms like Airbnb and VRBO have become increasingly popular in Dunedin, New Zealand. However, property owners looking to start a short-term rental business need to be aware of the local regulations. The Dunedin City Council has rules in place governing short-term visitor accommodation.

Starting a Short-Term Rental Business in Dunedin

Under Dunedin's current District Plan, using your house for homestays for five or fewer guests is permitted without requiring resource consent. This falls under the definition of "working from home". However, if you plan to host more than five guests, you will need to obtain resource consent from the Council.

Making an entire house available to paying guests is classified as "visitor accommodation" and requires resource consent. The District Plan defines visitor accommodation as "the use of land and buildings for temporary accommodation (up to three months stay within any calendar year period per customer) on a commercial fee-paying basis". Examples include:

• Motels
• Hotels
• Homestays or bed and breakfasts for six or more guests
• Serviced apartments
• Backpackers and hostels

If you separate off part of your house and fully equip it as a standalone residential unit, or convert an accessory building for residential use, you will likely need resource consent as well since this creates a second residential activity on the property.

In addition to District Plan requirements, short-term rental operators need to comply with the Building Act 2004. If a "change of use" occurs, such as separating part of the house for exclusive guest use with separate facilities, building consent may be required to ensure the building is compliant with the New Zealand Building Code. This could involve work like adding passive fire protection, fire alarms, and disability access.

Short-term rentals are not covered under the Residential Tenancies Act, so owners need to have a written short-term rental agreement outlining terms, house rules, number of guests allowed, etc. Some platforms like Airbnb provide booking terms, but owners should ensure the agreement covers their specific situation.

Income from short-term rentals, even if irregular, is taxable and needs to be declared. GST registration is required if your annual income exceeds $60,000. Expenses can be claimed if the income is reported.

The "mixed-use asset" tax rules may apply if the property is used both personally and as a short-term rental. If under this category and earning less than $4,000 annually, the income does not need to be declared (but expenses cannot be claimed either).

Owners should also check with their insurance provider about appropriate coverage for short-term rentals, including property damage and public liability. Some local regulations around parking, noise restrictions, and health and safety may apply as well.

In summary, while short-term renting can be profitable, Dunedin property owners need to ensure they understand and comply with all the relevant regulations. Checking District Plan requirements, obtaining necessary resource and building consents, having proper agreements and insurance in place, and meeting tax obligations are all essential when starting an STR business. Consulting with the Council, a lawyer, and an accountant can help navigate the rules and set up the business properly.

Short-Term Rental Licensing Requirements in Dunedin

Property owners in Dunedin looking to start a short-term rental business need to ensure they obtain the necessary consents and meet all regulatory requirements. The key considerations are:

Resource Consent

1. Using your house for homestays for 5 or fewer guests is permitted without resource consent, classified as "working from home".
2. Hosting more than 5 guests requires resource consent.
3. Renting out an entire house to paying guests is considered "visitor accommodation" and requires resource consent.
4. Creating a separate fully-equipped residential unit, either by dividing part of the house or converting an accessory building, likely requires resource consent for a second residential activity.

Building Consent

1. If a "change of use" occurs, such as separating part of the house for exclusive guest use with separate facilities, building consent may be required to ensure Building Code compliance.
2. This could involve adding passive fire protection, fire alarms, disability access, etc.
3. Sections 114-115 of the Building Act require notifying the Council in writing of an intended change of use.

Fees

1. If a change of use requires a resource consent, a development contribution fee will likely apply.
2. Building consent fees also apply and are based on the value of the building work.
3. See the Dunedin City Council website for current Building Services fees and charges.

Process

1. Contact the Dunedin City Council Customer Service and ask to speak with a duty planner about your short-term rental plans.
2. If resource and/or building consent is required, complete the relevant application forms (available on the Council website) and provide all supporting information.
3. Incomplete applications will not be accepted for processing.
4. Processing times vary depending on the complexity of the application. The Council has 20 working days to process a complete building consent application.

Penalties

1. Using a property for short-term rental without the required resource consent is a breach of the District Plan.
2. Failing to obtain building consent for a change of use violates the Building Act.
3. The Council can issue fines and penalties for non-compliance. Amounts vary case-by-case.

In summary, anyone considering starting a short-term rental business in Dunedin must engage with the City Council early on to determine what consents are needed for their specific situation. Obtaining the necessary resource and building consents is critical to operating legally and avoiding penalties. Allow ample time for the consent process. For further guidance, email building@dcc.govt.nz or call 03 477 4000 to speak with the Council's Building Services team.

Required Documents for Dunedin Short-Term Rentals

To operate a short-term rental legally in Dunedin, property owners may need to provide the following documents when applying for resource and building consent:

Resource Consent Application Form

1. Purpose: Applies for resource consent to use the property for visitor accommodation
2. Obtain from: Dunedin City Council website under Planning & Building Forms

Building Consent Application Form

1. Purpose: Applies for building consent for any change of use to comply with the Building Code
2. Obtain from: Dunedin City Council website under Planning & Building Forms

Written Notice of Intended Change of Use

1. Purpose: Notifies the Council of a change of use as required by Sections 114-115 of the Building Act
2. Provide in writing to the Council, no specific form

Site Plan

• Purpose: Shows the location of the property, boundaries, access, parking, etc.
• Can be drawn by the applicant or a surveyor/architect

Floor Plans

• Purpose: Shows the internal layout of the building, guest rooms, facilities
• Existing plans may suffice or new ones drawn up

Parking Plan

• Purpose: Demonstrates adequate on-site parking for guests
• Drawn by applicant showing location and dimensions of parking spaces

Proof of Ownership

• Purpose: Demonstrates the applicant owns the property or has owner's consent to apply
• Copy of property title or signed owner's approval

Company Details

• Purpose: If operating under a company, proves company is valid
• Company registration documents

Evacuation Plan

• Purpose: Outlines procedures for safely evacuating guests in an emergency
• Drawn up by applicant following Fire and Emergency New Zealand guidelines

Fee Payment

• Purpose: Pays the consent processing fees
• Paid to the Council by bank transfer, check, cash or EFTPOS

The specific documents required will depend on each property's circumstances. Contact the Dunedin City Council Customer Service at +64 3 477 4000 or planning@dcc.govt.nz to confirm what is needed for your short-term rental application. Incomplete applications will not be accepted for processing.

Dunedin Short-Term Rental Taxes

Short-term rental operators in Dunedin need to be aware of their tax obligations, including income tax, Goods and Services Tax (GST), and potential rates increases. Here's a breakdown of the key tax considerations:

Goods and Services Tax (GST)

• As of April 1, 2024, new GST rules nicknamed the "App Tax" apply to short-term rentals booked through online platforms like Airbnb and Bookabach.
• The online platform is required to collect 15% GST on all bookings, regardless of the property owner's GST registration status.
• For non-GST registered owners, the platform will provide an 8.5% flat-rate credit of the GST collected on the rental income. The remaining 6.5% is paid to the IRD.
• GST-registered owners will receive the rental income net of GST and return it as a zero-rated supply. They can continue claiming GST on expenses.

Income Tax

• All income earned from short-term rentals is taxable and must be declared, even if it's irregular.
• Owners can claim deductible expenses like insurance, rates, agent fees, repairs, interest, and accounting fees, but only for the portion of the year the property was rented.
• If the property is used both personally and as a short-term rental, the "mixed-use asset" rules may apply. If earning under $4,000 annually, the income does not need to be declared, but expenses cannot be claimed either.
• The 8.5% GST flat-rate credit for non-registered owners is not taxable income, but it reduces the amount of expenses that can be claimed.

Rates

• The Dunedin City Council has proposed increasing rates for properties rented short-term to visitors.
• Details are still being investigated, but hundreds of homes could be affected.

Possible Deductions

Expenses that may be deductible for tax purposes (for the portion of the year the property is rented) include:

1. Insurance
2. Local authority rates
3. Agent and marketing fees
4. Repairs and maintenance (not capital improvements)
5. Mortgage interest (subject to new interest deductibility rules)
6. Accounting fees

GST input credits can be claimed on expenses by GST-registered owners.

In summary, short-term rental operators in Dunedin must carefully consider their GST and income tax obligations, including the new "App Tax" rules for GST collection by online platforms. Seeking personalized advice from a qualified tax professional is recommended to ensure all requirements are met. Owners should also monitor any changes to local rates specific to short-term visitor accommodations.

New Zealand Wide Short-Term Rental Rules

In addition to Dunedin-specific regulations, short-term rental operators need to be aware of national rules that apply across New Zealand. Here are the key things to know:

Goods and Services Tax (GST) Changes - "App Tax"

1. As of April 1, 2024, new GST rules nicknamed the "App Tax" apply to short-term rentals booked through online platforms like Airbnb and Bookabach.
2. The online platform is required to collect 15% GST on all bookings, regardless of the host's GST registration status.
3. For non-GST registered hosts, the platform will provide an 8.5% flat-rate credit of the GST collected. The remaining 6.5% is paid to the IRD.
4. GST-registered hosts will receive rental income net of GST and return it as a zero-rated supply. They can continue claiming GST on expenses.

Income Tax

1. All short-term rental income is taxable and must be declared, even if irregular.
2. Expenses like insurance, rates, repairs, interest, and fees can be deducted, but only for the portion of the year the property was rented.
3. If the property is used both personally and as a short-term rental, the "mixed-use asset" rules may apply.
4. If earning under $4,000 annually, the income does not need to be declared, but expenses cannot be claimed either.
5. The short-stay standard-cost method provides a fixed nightly rate to cover costs, with no tax on income up to that rate. Tax is paid on anything earned above the rate, with no deductions.

Other Rules and Resources

1. Short-term rentals are not covered under the Residential Tenancies Act, so specific short-term rental agreements are needed.
2. Councils may require short-term rentals to be registered and may have other regulations to follow.
3. Insurance, health and safety, and local rules around parking, noise, etc. also need to be considered.
4. Government resources are available to help determine which rules apply:
   1. Short-stay accommodation overview: Flowchart of which rules apply to different situations
   2. Short-stay standard-cost method: Eligibility criteria and how to apply it
   3. Actual cost method: Calculating income and expenses

In summary, short-term rental hosts in Dunedin must comply with both local and national regulations. The new "App Tax" GST rules, income tax obligations, and short-stay accommodation resources from the IRD are particularly important for hosts to understand. Consulting with a qualified tax professional is recommended to ensure all requirements are being met.

Does Dunedin Strictly Enforce STR Rules?

Based on discussions among Airbnb hosts on forums like Bigger Pockets and Reddit, the general consensus is that Dunedin has a fairly balanced approach to short-term rental regulations compared to other New Zealand cities. The city council requires resource consent for larger scale STR operations, but allows homestays for up to 5 guests without special permission. This provides a path for casual hosts to operate legally.

However, Dunedin does appear to be increasing scrutiny and enforcement of the rules in recent years. In 2018, the council proposed applying a new "mixed-use" rating category to residential properties being used as short-term visitor accommodations, which would result in higher rates for hundreds of properties. The proposal aimed to level the playing field with traditional accommodation providers.

Despite the regulations, many hosts continue to operate STRs in Dunedin, with around 790 entire homes or private rooms available on platforms like Airbnb as of January 2018. Hosts seem willing to obtain the necessary resource consents and building permits in order to run their businesses legally.

Overall, while Dunedin has rules in place governing short-term rentals, the city takes a relatively permissive approach compared to markets like Queenstown that have much stricter limits on STRs. Responsible hosts who make an effort to comply with the planning and building requirements can successfully operate in Dunedin. The city appears open to working with the STR industry to balance tourism growth with housing affordability and community concerns. Dunedin's STR environment is not a total free-for-all, but it's certainly more favorable than many other cities in New Zealand and abroad.

How to Start a Short-Term Rental Business in Dunedin

Starting a short-term rental business in Dunedin requires careful planning and compliance with local regulations. Here are the key steps to follow:

1. Determine if you need resource consent

1. Homestays for 5 or fewer guests are permitted without resource consent, classified as "working from home".
2. Hosting more than 5 guests requires resource consent.
3. Renting out an entire house to paying guests is considered "visitor accommodation" and requires resource consent.
4. Creating a separate fully-equipped residential unit likely requires resource consent for a second residential activity.
5. Review the District Plan rules and consult with the Dunedin City Council early on to confirm consent requirements for your specific situation.

2. Notify the Council of any change of use

1. If separating part of the house for exclusive guest use with separate facilities, this is a "change of use" under the Building Act.
2. Sections 114-115 require notifying the Council in writing of the intended change.
3. The Council will determine if building consent is needed to make the property compliant with the Building Code (e.g. adding fire protection, alarms, disability access).
4. Engage with the Council's Building Services team for guidance on the change of use process and requirements.

3. Prepare and submit consent applications

1. If resource and/or building consent is required, complete the relevant application forms (available on the Council website).
2. Provide all required supporting information, which may include:
3. Site plan showing property location, boundaries, access, parking
4. Floor plans of the building layout and facilities
5. Parking plan demonstrating adequate on-site parking
6. Proof of ownership or owner's consent
7. Company details if operating under a company structure
8. Pay the applicable consent processing fees.
9. Ensure your application is complete with all required information to avoid processing delays. Incomplete applications will not be accepted.

4. Arrange compliance requirements

1. Obtain any required building upgrades to meet Building Code compliance.
2. Develop an evacuation plan for safely evacuating guests in an emergency.
3. Ensure you have appropriate insurance coverage for the STR use, including liability.
4. Register for GST if required (mandatory if earning over $60,000 annually).
5. Work with qualified professionals (builders, accountants, lawyers) to ensure all compliance boxes are checked.

5. List your property

1. Once you have the necessary consents and compliance sorted, list your property on platforms like Airbnb and Bookabach.
2. Develop a comprehensive listing with high-quality photos, detailed descriptions, and clear house rules.
3. Decide on your pricing strategy, considering seasonality, events, and comparable listings.
4. Emphasize the unique features and selling points of your property. Be responsive to inquiries and guest reviews.

6. Manage your operations

1. Implement a reliable cleaning and maintenance routine between guest stays.
2. Provide quality amenities and thoughtful touches to enhance the guest experience.
3. Maintain accurate records of income and expenses for tax purposes.
4. Collect and remit GST as required (via the new "App Tax" rules).
5. Consider using a property management service if you don't have the time or desire to manage the day-to-day operations yourself.

By following these steps and prioritizing compliance with Dunedin's short-term rental regulations, you can successfully launch and operate an STR business. Clear communication with the Council, thorough planning, and a commitment to providing exceptional guest experiences will set you up for STR success in this popular New Zealand destination.

Who to Contact in Dunedin about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations and zoning requirements in Dunedin, here are the key contacts and resources:

Dunedin City Council Customer Service

1. Phone: +64 3 477 4000
2. Email: dcc@dcc.govt.nz
3. Address: Customer Service Centre, Ground Floor, Civic Centre, 50 The Octagon, Dunedin
4. Opening hours: Monday, Tuesday, Thursday, Friday 8:30am-5pm; Wednesday 9am-5pm

Contact the Council's Customer Service team as a starting point. They can direct your inquiry to the appropriate department, whether it's Planning for District Plan rules and resource consents or Building Services for Building Act requirements and building consents.

Dunedin City Council Building Services

1. Phone: +64 3 477 4000
2. Email: building@dcc.govt.nz
3. Subscribe to Building Services e-newsletters: https://confirmsubscription.com/h/t/ECDB428D6C40DC94

Contact Building Services for guidance on change of use requirements, building consents, and compliance with the Building Code for short-term rentals.

Dunedin City Council Duty Planners

Phone: +64 3 477 4000 (ask for the Duty Planner)

Duty Planners are available to answer questions about the District Plan rules, resource consent requirements, and development contributions for short-term rentals. Call the main Council number and ask to speak to the Duty Planner.

Online Resources

1. Dunedin City Council short-term visitor accommodation info: https://www.dunedin.govt.nz/services/building-services/short-term-visitor-accommodation
2. Proposed Second Generation District Plan (2GP): https://www.dunedin.govt.nz/council/district-plan/2gp

The Council website provides detailed information on short-term rental compliance considerations and links to the relevant District Plan rules.

Communities and Forums

1. BiggerPockets Short-Term and Vacation Rental Forum: https://www.biggerpockets.com/forums/530-short-term-and-vacation-rental
2. Dunedin Subreddit: https://www.reddit.com/r/dunedin/

Connect with other short-term rental hosts and investors on BiggerPockets' dedicated forum to ask questions, share experiences, and learn best practices. The Dunedin subreddit can also be a useful local resource.

By engaging with these Council contacts and online communities, short-term rental operators in Dunedin can get the information and support they need to ensure compliance with all relevant regulations. The Council's Customer Service team and Duty Planners are great starting points for any questions. From there, they can direct you to the appropriate departments and resources to successfully navigate Dunedin's short-term rental rules.

What Do Airbnb Hosts in Dunedin on Reddit and Bigger Pockets Think about Local Regulations?

Discussions among Airbnb hosts on forums like Reddit and Bigger Pockets provide insight into how local short-term rental regulations are viewed in Dunedin. Here are a few relevant threads:

Reddit - r/dunedin - "Absolute state of housing"

1. In this thread, users discuss the poor condition of some rental properties in Dunedin, with one commenter noting "Dunedin truly has the worst landlords in NZ."
2. Another says "Healthy home standards dont mean shit in dunners. You can see a home violating the standards full of kids every meter."
3. These comments suggest some Dunedin landlords, including STR hosts, may not be fully complying with rental property standards.

Bigger Pockets - "Looking to Airbnb/vacation in Dunedin area"

1. An investor posted about wanting to purchase a property in Dunedin for use as a short-term rental.
2. No replies directly addressed Dunedin's STR regulations, indicating this information may not be widely discussed on Bigger Pockets.

Reddit - r/dunedin - "Is there any point trying to find a periodic tenancy when flatting, or is Dunedin pretty much set on fixed one-year tenancies?"

1. While not specifically about short-term rentals, this thread highlights how Dunedin's rental market heavily favors fixed-term leases to cater to students.
2. One user notes "Historically any rental in Dunedin has been on a fixed term 1 Jan-31 Dec tenancy so that landlords can make students keep paying for 52 weeks when they are only around for 40."
3. This suggests Dunedin landlords, including STR hosts, may face less competition from long-term rentals, as most target the student market.

Reddit - r/dunedin - "How far in advance do I need to find housing?"

1. A PhD student moving to Dunedin asks for advice on how early to secure a rental, especially with pets.
2. Commenters recommend starting the search process very early, noting the tight rental market and limited pet-friendly options.
3. One says "Unfortunately, Dunedin like many other parts of the country are very anti-pet with rentals. So like you said, this will significantly limit your housing options."
4. For STR hosts, this could mean less competition from long-term rentals, but also indicates the market heavily favors landlords.

Overall, these threads paint a picture of a tight rental market in Dunedin that favors landlords and fixed-term student leases. Short-term rental regulations are not widely discussed, but some comments suggest certain landlords may not be fully compliant with rental standards. The lack of pet-friendly properties could also drive demand for STRs from certain guests. However, more research into Dunedin-specific STR host experiences would be beneficial to draw firmer conclusions about attitudes toward local regulations.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.