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

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

Hamilton, New Zealand recently passed new regulations for short-term rentals like Airbnb and VRBO that went into effect last January 1, 2024. Here is an overview of the key rules for operating short-term rentals in Hamilton:

Starting a Short-Term Rental Business in Hamilton

As of January 2023, Hamilton City Council approved a new Short-Term Rental (STR) licensing program for operators and brokers. Starting December 1, 2023, STR operators will need to apply for a municipal business license in order to legally rent out their principal residence on a short-term basis (defined as stays of no more than 28 consecutive nights).

Some key requirements of the new STR licensing program include:

• STRs can only be operated out of the host's principal residence. Commercial operators are not permitted.
• Proof of insurance with host liability or commercial general liability of at least $1,000,000 per occurrence is required.
• A maximum of 2 guests per sleeping room are allowed, with an exemption for children under 2 years old.

License fees will vary based on whether a partial or entire dwelling is being rented. Fees are intended to cover the city's costs of administering and enforcing the regulations.

Enforcement of the new STR bylaw will begin on January 1, 2024. Fines and penalties for non-compliance can vary based on the offense, and ongoing violations may result in a refusal, suspension, or revocation of the STR license.

As of November 2022, there were an estimated 1,250 active STR listings in Hamilton, with 80% being entire homes/apartments, 19% private rooms, and 1% shared rooms. The new regulations aim to balance the needs of the city and changes in tourism, while increasing housing supply and aiding homeowners with housing costs.

When setting up an STR, hosts should be aware that they are not covered by the Residential Tenancies Act, so standard rental agreements don't apply. Airbnb and other STR booking platforms may provide booking terms, but hosts should still have a written short-term rental agreement outlining rules and expectations.

Income earned from short-term rentals is taxable and GST rules may apply if annual revenue exceeds $60,000 or additional services like meals or cleaning are provided. Consulting with an accountant is recommended.

In summary, Hamilton's new short-term rental regulations introduce licensing, fees, and operational requirements starting in 2024. Hosts should ensure they meet all criteria and obligations before listing their property. With responsible participation, STRs can continue to play a role in Hamilton's tourism industry and economy.

Short-Term Rental Licensing Requirements in Hamilton

As of December 1, 2023, short-term rental operators in Hamilton will need to apply for a municipal business license in order to legally rent out their principal residence. Here are the key requirements and steps in the licensing process:

1. Zoning Verification: Applicants must first complete a Zoning Verification Report to ensure the STR is permitted under the Zoning By-law 05-200.

2. Application Form and Supporting Documents: Submit a completed Business Licence Application Form along with:

1. Proof of principal residence
2. Proof of insurance with host liability or commercial general liability of at least $1,000,000 per occurrence
3. Floor plans of the STR
4. Parking Management Plan
5. Fire Safety Plan
6. Electrical Safety Authority (ESA) General Inspection Report
7. Guest Information Package

3. Fees: Licence fees vary based on whether a partial or entire dwelling is being rented:

Entire Dwelling:

1. Processing Fee (with HST): $82
2. Licence Fee: $390
3. Fire Administrative Fee: $246.14 + HST

Partial Dwelling:

1. Processing Fee (with HST): $82
2. Licence Fee: $195
3. Fire Administrative Fee: $246.14 + HST

4. Submission: Complete application packages can be submitted in person to 330 Wentworth Street North, Hamilton or by email. A file number will be created and sent back to the applicant.

5. Inspections: Upon submission of a complete application, Hamilton Fire will review the Fire Escape Plan, and a Property Standards inspection will be completed by a Licensing Compliance Officer.

6. Licence Issuance: Timelines for license issuance can vary depending on the results of the required inspections. Licenses must be renewed annually.

Enforcement of the new STR bylaw will begin on January 1, 2024. Fines and penalties for non-compliance can vary based on the offense, and ongoing violations may result in a refusal, suspension, or revocation of the STR license.

It's important for STR hosts to be aware of additional rules, such as:

1. STRs can only be operated out of the host's principal residence
2. A maximum of 2 guests per sleeping room are allowed, with an exemption for children under 2 years old
3. Income earned is taxable and GST rules may apply if annual revenue exceeds $60,000 or additional services are provided

By meeting all criteria and obligations, STR operators can legally participate in Hamilton's tourism industry while the city aims to balance economic benefits with housing availability and community needs. Prospective hosts should carefully review the full licensing requirements on the City of Hamilton website.

Required Documents for Hamilton Short-Term Rentals

To apply for a short-term rental license in Hamilton, operators need to submit the following documents:

1. Short Term Rental Application Form: The main application form that collects key information about the STR property and host.
2. Floor Plan: Shows the square footage, number of bedrooms, location of smoke alarms/carbon-monoxide detectors, and evacuation routes. Helps verify the property meets safety requirements.
3. STR Questionnaire: Provides details on what parts of the property will be used for the STR, type of building, parking spaces, emergency contact, and advertising platforms used.
4. Proof/Declaration of Principal Residence: Confirms the STR is the host's primary residence, a key requirement of the licensing program.
5. Guest Information Package:Outlines house rules, safety information, and local bylaws for guests. Ensures guests are informed of expectations.
6. Detailed Fire Escape Plan: Documents evacuation procedures in case of emergency. Required for fire safety compliance.
7. Proof of Insurance Coverage: Demonstrates the host has adequate liability insurance, minimum $1,000,000 per occurrence. Protects both the host and guests.
8. Condo Board/Property Owner Approval: If applicable, written approval is needed to confirm the STR is permitted in the building or by the owner.
9. Statutory Declaration of Fire Code Compliance: Attests the property complies with the Fire Prevention Act and Ontario Fire Code.
10. Government-Issued ID: Verifies the identity of the STR operator.
11. Criminal Record Check: From the police services board where the applicant lives. Required for the safety of guests and community.
12. Electrical Safety Documentation: From an Electrical Safety Authority endorsed contractor, confirms the STR meets electrical codes. Cost is the owner's responsibility.
13. Zoning Verification Certificate: For secondary dwelling units only. Confirms the STR use is permitted under Hamilton Zoning By-law 05-200. Applicants must review the certificate for any additional instructions before proceeding.

These documents help the City of Hamilton verify that STRs are operating legally, safely, and in compliance with regulations. The complete application package can be submitted in person at 330 Wentworth Street N or by email.

Hamilton Short-Term Rental Taxes

When operating a short-term rental business in Hamilton, it's important to understand your tax obligations. The two main types of taxes that apply are income tax and Goods and Services Tax (GST).

Income Tax

All income you receive from providing short-term accommodation, including through platforms like Airbnb and Bookabach, is taxable. This applies even for one-off or irregular rentals. The amount of tax you'll pay depends on your total taxable income for the year.

If your short-term rental income is below certain thresholds, you may be able to use the standard-cost method instead of tracking your actual expenses. For the 2023-24 income year, the standard-cost is $61 per night for homeowners and $55 per night for renters. Income up to this level is exempt, and you only pay tax on amounts charged above the standard-cost.

Goods and Services Tax (GST)

If your annual turnover from short-term rentals exceeds $60,000, you must register for and charge GST at 15%. GST may also apply if you provide additional services like meals or cleaning to guests.

From April 1, 2024, new rules will require online platforms like Airbnb to collect GST on all bookings, even if the host is not GST-registered. The platform will return a portion of the GST to the host and the rest to Inland Revenue.

Deductions and Write-Offs

Hosts can deduct expenses related to their short-term rental business, such as:

1. Mortgage interest or rent
2. Insurance
3. Local authority rates
4. Repairs and maintenance
5. Marketing and host service fees
6. Utilities and consumables provided to guests

However, if you use the standard-cost method, you cannot claim these deductions as the standard-cost rate is intended to cover typical expenses.

Proposed changes may limit the deductibility of interest on loans for residential properties used for short-term renting. Existing loans will be phased out between October 2021 and March 2025.

It's important to keep accurate records of your income and expenses, and to seek professional tax advice to ensure you are meeting all your obligations. With the proper planning and management, operating a short-term rental business in Hamilton can be a rewarding venture.

New Zealand Wide Short-Term Rental Rules

In addition to Hamilton's specific short-term rental regulations, there are some nationwide rules and considerations that hosts should be aware of:

Goods and Services Tax (GST)

From April 1, 2024, new legislation will require online marketplaces like Airbnb to collect and return GST at 15% on all bookings made through their platform, even if the host is not GST-registered.

1. If the host is not GST-registered, they will receive an 8.5% flat-rate credit from the marketplace operator to cover GST claimable on expenses. The remaining 6.5% goes to Inland Revenue.
2. GST-registered hosts will receive rental income net of GST and return it as a zero-rated supply. They can continue to claim GST on expenses.

Hosts with annual turnover exceeding $60,000 must register for GST. Those providing over 2,000 nights of STR accommodation annually through a marketplace can opt out of the new rules and manage their own GST.

Income Tax

All STR income is taxable, even for one-off or irregular rentals. If annual STR revenue is under $4,000 and the property falls under the "mixed-use asset" rules, this income does not need to be declared, but expenses cannot be claimed either.

Tenancy Laws

STRs are not covered under the Residential Tenancies Act, so standard rental agreements do not apply. Hosts should have a written short-term rental agreement outlining rules and expectations. Tenants cannot sublet a property on STR platforms without the landlord's permission.

Insurance

Usual home and contents insurance may not cover STRs. Hosts should speak to their insurer about appropriate coverage, including public liability to protect against guest injuries. Some STR platforms offer limited damage protection and liability insurance.

Health and Safety

Hosts must ensure their STR property is safe and healthy for guests. This may include complying with fire safety and evacuation requirements, pool fencing laws, and providing safety information to guests.

While there is currently no comprehensive nationwide regulatory framework for STRs, the New Zealand government is considering proposals to address this. For now, STR hosts should carefully review all applicable national and local rules to ensure they are operating legally and responsibly.

Does Hamilton Strictly Enforce STR Rules?

Based on discussions in online real estate investing communities like BiggerPockets and Reddit, it appears that Hamilton does intend to strictly enforce its new short-term rental regulations once they go into effect in 2024. Compared to some other cities, Hamilton seems to be taking a firmer stance in prohibiting commercial STR operators and limiting rentals to principal residences only.

On the Hamilton subreddit, local hosts have expressed concerns about the impending changes, with some planning to convert their Airbnb properties back to long-term rentals. One host commented: "I live next to one of these damn things. I've spoke to the owner a ton and we've discussed this. He plans on doubling the regular rent they charge if they start taxing these guys like hotels."

Another Redditor noted the challenges of being an STR host in Hamilton's regulatory environment: "Hard to enforce. Never had an issue doing it anywhere before so not much will change."

While some hosts may attempt to skirt the rules, the general sentiment seems to be that Hamilton will be cracking down on non-compliant STRs once enforcement begins in January 2024. Fines starting at $500 and escalating to $100,000 for repeat offenders are expected to serve as a strong deterrent.

Compared to more Airbnb-friendly destinations, Hamilton appears to be prioritizing housing availability and neighborhood stability over the economic benefits of short-term rentals. The city's stance reflects a growing trend of municipalities imposing stricter regulations on STRs to combat housing shortages and preserve community character.

In summary, while individual hosts may still attempt to operate under the radar, Hamilton's regulatory approach suggests the city will not be particularly accommodating to Airbnb and other STR platforms moving forward. Prospective hosts should carefully weigh the risks and challenges of operating in Hamilton's restrictive STR environment.

How to Start a Short-Term Rental Business in Hamilton

Starting a short-term rental business in Hamilton can be a rewarding venture, but it's important to follow the proper steps to ensure compliance with local regulations. Here's a comprehensive guide on how to get started:

1. Understand the STR By-law: Familiarize yourself with Hamilton's STR licensing program, which goes into effect December 1, 2023. Key points include:

1. STRs are only permitted in the host's principal residence
2. Commercial operators are not allowed
3. Maximum of 28 consecutive rental nights
4. Enforcement begins January 1, 2024

Review the full by-law on the City of Hamilton website to ensure you meet all requirements.

2. Obtain Necessary Permits and Licenses: Apply for a municipal business license through the City of Hamilton. You'll need to submit:

• Short Term Rental Application Form
• Proof of principal residence
• Floor plans
• Parking management plan
• Fire safety plan
• Electrical Safety Authority inspection report
• Proof of insurance ($1,000,000 liability minimum)

Start the application process early to allow time for inspections and approvals.

3. Prepare Your Property: Ensure your STR meets all safety requirements, such as smoke and carbon monoxide detectors, fire extinguishers, and emergency contact information. Consider any extra furnishing, upgrades, or amenities that will make your property more appealing to guests. Put together a comprehensive house manual with instructions for appliances, Wi-Fi password, local recommendations, and emergency procedures.

4. Choose a Booking Platform: Select a reputable STR platform like Airbnb or Vrbo to list your property. Create a detailed listing with high-quality photos, accurate descriptions, and competitive pricing. Research similar listings in your area to gauge market rates and set competitive prices.

5. Understand Tax Obligations: STR income is taxable, and you may need to charge and remit GST if your annual revenue exceeds $60,000. Keep accurate records of all income and expenses. Consult with a tax professional to ensure you're meeting all tax requirements and maximizing deductions.

6. Establish House Rules and Guest Communication: Create clear house rules that outline expectations for guests, such as noise levels, parking, and pet policies. Develop a system for effective communication before, during, and after stays. Use a guest messaging automation tool to streamline communication and provide timely responses.

7. Manage Bookings and Turnovers: Implement a system for managing reservations, check-ins, and check-outs. Ensure the property is thoroughly cleaned and restocked between guests. Consider hiring a professional cleaning service or co-host to help manage turnovers.

8. Promote Your Listing: In addition to the exposure from your chosen booking platform, promote your STR through social media, local tourism websites, and word-of-mouth referrals. Encourage satisfied guests to leave reviews, which can help attract future bookings.

By following these steps and staying informed about Hamilton's evolving STR regulations, you'll be well on your way to launching a successful short-term rental business in the city. Remember to prioritize guest satisfaction, maintain open communication with the city and your neighbors, and continuously improve your property and services to stand out in the competitive STR market.

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

For official information and assistance regarding short-term rental regulations and zoning in Hamilton, hosts should contact:

City of Hamilton - Licensing and By-Law Services

• Phone: +64 7 838 6699
• In-person: 330 Wentworth Street N, Hamilton (Monday or Wednesday 8:30 am to 4:30 pm)

The Licensing and By-Law Services department can provide guidance on the STR licensing process, zoning verification, and compliance with city regulations. They are the primary point of contact for any questions or concerns about operating a short-term rental in Hamilton.

City of Hamilton - Planning and Development Department

• Phone: +64 7 838 6699
• Address: 260 Anglesea Street, Hamilton Central, 3204 Waikato, New Zealand

For more detailed inquiries about zoning, land use, and the District Plan, hosts can reach out to the Planning and Development Department. They can assist with understanding how the zoning bylaws apply to specific properties and STR use.

In addition to official city contacts, Hamilton STR hosts may find value in connecting with local host communities and online forums. While not endorsed by the city, these groups can provide peer support, insights, and shared experiences:

• Airbnb Community Center - New Zealand Forum: An online forum for Airbnb hosts in New Zealand to discuss various topics, including regulations, hosting tips, and local market trends.
• Hamilton, New Zealand Airbnb Hosts Facebook Group: A private Facebook group for Airbnb hosts in the Hamilton area to connect, ask questions, and share advice.
• BiggerPockets Forums - New Zealand Real Estate Investing: While not Hamilton-specific, this forum on the popular real estate investing site BiggerPockets has discussions related to investing in and managing rental properties in New Zealand.

By utilizing both official city resources and tapping into the knowledge of experienced local hosts, STR operators in Hamilton can ensure they are complying with all regulations while maximizing the success of their rental business.

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

To get a sense of how short-term rental hosts in Hamilton feel about the city's new regulations, here are some insights from local online communities:

On the Hamilton subreddit, one host expressed concerns about the impending changes, commenting: "I live next to one of these [STRs]. I've spoke to the owner a ton and we've discussed this. He plans on doubling the regular rent they charge if they start taxing these guys like hotels." This suggests some hosts may convert their properties back to long-term rentals in response to the new rules.

Another Redditor noted the challenges of being an STR host in Hamilton's regulatory environment: "Hard to enforce. Never had an issue doing it anywhere before so not much will change." While some hosts may attempt to skirt the rules, the general sentiment seems to be that Hamilton will be cracking down on non-compliant STRs.

In a thread about short-term rentals in nearby Tauranga, one commenter explained why many listings are seasonal: "Because they want regular income during the quiet tourist season then the ability to kick you out come summer to chuck it on Airbnb and rip off suckers night after night. Rinse and repeat every year." This practice, while lucrative for hosts, contributes to rental shortages and high rents.

On the Airbnb Community Center forum for New Zealand hosts, there are few discussions specifically about Hamilton's regulations. However, hosts across the country share concerns about the impact of new rules and compliance costs on their businesses.

While BiggerPockets has an active community of New Zealand real estate investors, there are no recent threads focused on Hamilton's short-term rental market or regulations. Most discussions center around long-term rentals and property management challenges.

Overall, it appears Hamilton's STR hosts have mixed feelings about the incoming regulations. Some plan to adapt their business models, while others hope to continue operating under the radar. The city's enforcement efforts will likely determine how the market evolves in the coming years. As one host put it, "Forget it Jake, it's Boomertown."

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.