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

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

Short-term rentals like Airbnb and VRBO have become increasingly popular in tourist destinations like Rotorua, New Zealand. However, local governments are starting to impose more regulations on these types of rentals. Here's an overview of the current short-term rental rules in Rotorua:

Starting a Short-Term Rental Business in Rotorua

As of May 2024, the Rotorua Lakes Council is proposing changes to how short-term rentals are classified and rated. Under the draft policy, properties advertised for short-term rental for more than 60 days per year would be considered commercial and subject to higher rates. Previously, this only applied to properties rented out for at least 100 days annually.

The council says this change is needed to address Rotorua's housing shortage, ensuring short-term rental owners pay their "fair share". Some bed and breakfast owners are unhappy, with one saying the plan "beggars belief" as they face potential rates increases of up to 180%.

The proposed District Plan Change 6 would also limit short-term rentals to a maximum of 12 guests, along with imposing parking and noise standards. The intent is to protect residential areas from being overrun by holiday rentals.

Investors considering buying a property in Rotorua to list on Airbnb should carefully research these evolving regulations. While short-term rentals can provide good income, increasing council rates and restrictions could impact profitability. Getting involved in local forums like the Rotorua subreddit can provide helpful on-the-ground insights from residents and other rental owners.

Overall, Rotorua remains an attractive destination with its scenic lakes, trails, and strong tourism economy. But those looking to start a short-term rental business need to stay on top of new council policies that aim to balance the needs of visitors and local residents facing a housing crunch. Consulting with local real estate agents and the council directly is advised before making any major investments.

Short-Term Rental Licensing Requirements in Rotorua

As part of the proposed District Plan Change 6, short-term rental operators in Rotorua may soon need to obtain a resource consent from the Rotorua Lakes Council. This would apply to properties rented out to paying guests for more than 60 nights per year.

Key requirements being considered include:

• A maximum of 12 guests allowed per night
• Sufficient on-site parking for guests
• Compliance with District Plan noise standards
• Proper management of rubbish/recycling
• Valid evacuation plan and safety information for guests
• Record-keeping of all bookings and guest details

To apply for resource consent, owners would need to submit an application to the Council's Planning Services team. This includes providing:

1. A site plan showing parking and outdoor living spaces
2. Floor plans indicating bedrooms and communal areas
3. An assessment of environmental effects
4. Guest management and complaints procedures
5. Application fee (amount to be determined)

The Council aims to process non-notified resource consent applications within 20 working days. More complex applications requiring public notification may take longer.

Under the draft plan change, operating without a resource consent could result in fines of up to $300,000 and $10,000 per day for continuing offenses. The Council would also have powers to request booking records and conduct inspections.

These proposed rules still need to go through a submissions and hearings process before potentially being adopted in 2025. Short-term rental owners and the wider community will have opportunities to provide feedback.

In the meantime, Rotorua short-term rental operators should ensure they are meeting their current obligations, including:

1. Paying the correct level of rates for their property category
2. Complying with the Building Act, including fire egress and safety
3. Meeting District Plan standards for noise, parking, and outdoor living spaces
4. Having a valid resource consent if required (e.g. for hosted rentals)

Owners can contact the Council's Planning Services team for specific guidance on their property's compliance requirements. Staying informed on the progress of Plan Change 6 will also be important for Rotorua's many short-term rental providers.

Required Documents for Rotorua Short-Term Rentals

Under the proposed District Plan Change 6, short-term rental operators in Rotorua would need to provide the following documents when applying for resource consent:

1. Site Plan: A scaled drawing showing the location of buildings, parking spaces, outdoor living areas, and property boundaries. This helps assess if there is adequate parking and outdoor space for guests. Engage a surveyor or draft the plan based on property records.
2. Floor Plans: Detailed layouts indicating the number and location of bedrooms, bathrooms, kitchen, and communal spaces. Used to confirm maximum guest capacity. Architectural drawings or DIY plans with room dimensions are acceptable.
3. Assessment of Environmental Effects (AEE): A written report identifying any potential impacts on the surrounding area, such as noise, traffic, or visual amenity. Describes how these effects will be managed or mitigated. Can be prepared by the applicant or a planning consultant.
4. Guest Management Plan: Outlines procedures for communicating with guests, handling complaints, and enforcing house rules. Includes contact details for the property manager, parking instructions, and emergency information. Template plans are available from the Council.
5. Record of Bookings: A log or calendar showing the dates the property was rented out to paying guests over the past 12 months. Used to determine if the 60-night threshold has been exceeded, triggering the need for resource consent.
6. Evacuation Plan: A diagram and instructions showing designated exits and assembly points in case of emergencies like fire or earthquake. Must be displayed prominently inside the rental property. Guidance is available from Fire and Emergency NZ.
7. Proof of Insurance: A certificate of currency demonstrating the property has appropriate insurance cover for its use as a short-term rental. Protects guests and owners in the event of accidents or damage.
8. Parking Plan: A map showing the location and dimensions of on-site guest parking, with one space required per four guests. Helps manage parking demand and traffic in residential areas. Can be included on the site plan.

These documents would be submitted to the Rotorua Lakes Council along with the applicable resource consent application form and fee. The Council's planning team can assist with any questions and advise if further information is needed.

It's important to note that these requirements are still in draft form and may change based on public consultation and the Council's decision-making process. Short-term rental owners should stay informed on the final provisions of Plan Change 6 once adopted.

Rotorua Short-Term Rental Taxes

When operating a short-term rental business in Rotorua, there are two main types of taxes to be aware of: Income Tax and Goods and Services Tax (GST).

Income Tax

All income earned from providing short-term rentals in Rotorua is subject to Income Tax. You will need to file an Income Tax return each year to account for your rental income. The amount of tax you pay depends on your total taxable income from all sources, with rates ranging from 10.5% to 39%.

If your rental income is below a certain threshold, you may be able to use the "standard-cost" method. For the 2023-24 tax year, the standard-cost is $61 per night for homeowners and $55 for non-homeowners. Income up to this nightly rate is exempt, and you only pay tax on amounts charged above the standard-cost.

Goods and Services Tax (GST)

If your total turnover from all taxable activities, including rental income, exceeds $60,000 in a 12-month period, you must register for GST. The current GST rate is 15%, which is added to the price of your rental services.

When calculating your GST turnover, include your gross rental income, business income, and any other taxable activities. If you jointly own a rental property, that income is treated separately for GST purposes.

Interestingly, if you rent to an associated person like a family member, you must charge GST based on the full market value of the accommodation, even if you give them a discounted rate.

Deductions and Expenses

To reduce your tax liability, you can claim deductions for expenses directly related to your rental business. Common deductible expenses include:

1. Mortgage interest
2. Property rates and insurance
3. Utilities and cleaning costs
4. Repairs and maintenance
5. Depreciation on furniture and fittings
6. Marketing and advertising fees

If the property is used for both personal and rental purposes, you'll need to apportion the expenses accordingly. The IRD provides detailed guidance on how to calculate deductions for "mixed-use" holiday homes.

It's important to keep accurate records of all income and expenses related to your short-term rental. Consult with a qualified tax professional to ensure you are meeting your tax obligations and claiming all eligible deductions.

By understanding the Income Tax and GST requirements, as well as allowable expense claims, you can run a compliant and profitable short-term rental business in Rotorua. Stay up to date with any changes to tax legislation that may impact your operations.

New Zealand Wide Short-Term Rental Rules

In addition to Rotorua-specific regulations, short-term rental hosts must also comply with national laws and tax requirements:

Income Tax

All income earned from providing short-term accommodation is subject to income tax. Hosts must declare this rental income in their annual tax return, even for irregular or one-off rentals. The amount of tax owed depends on the host's total taxable income from all sources, with rates ranging from 10.5% to 39%.

Hosts can claim deductions for expenses directly related to the rental activity, such as mortgage interest, property rates, insurance, utilities, cleaning costs, and depreciation on furniture. If the property is used for both personal and rental purposes, expenses must be apportioned accordingly.

Goods and Services Tax (GST)

From 1 April 2024, a new "app tax" requires online marketplaces like Airbnb to collect and return GST at 15% on all bookings, even if the host earns under the $60,000 GST registration threshold. For unregistered hosts, Airbnb will pass on an 8.5% flat-rate credit to cover GST claimable on expenses, with the remaining 6.5% paid to Inland Revenue.

GST-registered hosts will receive the rental income net of GST from Airbnb and return this as a zero-rated supply. They can continue claiming GST on property expenses as normal. Hosts must advise the marketplace of their GST registration status to avoid incorrectly receiving the flat-rate credit.

Large-scale operators with over $500,000 in annual taxable supplies or providing 2,000+ nights of accommodation can opt out of the new GST rules and manage their own GST obligations.

Health and Safety

While not covered by the Residential Tenancies Act, short-term rental properties must still meet various health and safety standards. Recommendations include:

1. Installing working smoke alarms and carbon monoxide detectors
2. Providing a fire extinguisher and clearly marked escape route
3. Removing or labeling potential trip hazards
4. Ensuring proper ventilation and functional temperature controls
5. Establishing safe occupancy limits based on government guidelines
6. Making a first-aid kit available to guests

Insurance

Standard home and contents insurance may not cover short-term rentals. Hosts should speak to their insurer about appropriate cover for property damage, theft, or injury to guests. Some marketplaces like Airbnb offer limited protection, but additional insurance is still advisable.

Local Regulations

Rotorua hosts must also be aware of any district-specific rules around building standards, fire safety, parking provisions, and resource consents for short-term accommodation. Checking with the local council is the best way to ensure compliance.

By understanding and adhering to these nationwide requirements, as well as Rotorua's specific short-term rental regulations, hosts can operate legally and avoid potential penalties. Staying informed of any legislative changes is also important in this evolving industry.

Does Rotorua Strictly Enforce STR Rules?

Based on discussions in real estate investing forums like BiggerPockets and Reddit, it appears that Rotorua has a somewhat mixed reputation when it comes to short-term rental regulations and enforcement.

On one hand, Rotorua seems to have a fairly active Airbnb market, with numerous listings available in popular areas like Lynmore, Owhata, and around the lakes. This suggests a certain level of tolerance for short-term rentals, at least historically.

However, the Rotorua Lakes Council's proposed District Plan Change 6 signals a potential crackdown on STRs. If adopted, the new rules would require resource consent for rentals exceeding 60 nights per year, along with stricter standards for parking, noise, and occupancy. The draft plan also includes hefty fines of up to $300,000 for non-compliant operators.

This proposed regulatory shift has caused concern among some local STR hosts. As one Reddit user noted, the council's plan to reclassify STRs as commercial and impose much higher rates "beggars belief" and could threaten the viability of many Airbnb listings.

Compared to other New Zealand cities, Rotorua appears to be taking a more proactive approach to regulating short-term rentals. While not as restrictive as places like Queenstown, which has capped STRs in certain zones, Rotorua seems determined to find a balance between supporting tourism and protecting residential areas.

Despite the proposed rule changes, it's likely that some hosts will continue operating STRs in Rotorua, even if not fully compliant. As seen in other markets, the potential for high nightly rates can be tempting, leading some to risk fines or operate under the radar. However, the council's strong enforcement language and inspection powers may deter many from this path.

In summary, while Rotorua has been somewhat Airbnb-friendly to date, the city's STR landscape is poised for change. The council's proposed regulations suggest a stricter approach is imminent, though how tightly the new rules are enforced remains to be seen. Hosts should carefully weigh the risks and closely monitor the outcome of Plan Change 6 before investing in Rotorua short-term rentals.

How to Start a Short-Term Rental Business in Rotorua

Starting a short-term rental business in Rotorua can be a lucrative venture, but it's important to follow the proper steps to ensure compliance with local regulations and set yourself up for success. Here's a step-by-step guide:

1. Research local regulations: Familiarize yourself with Rotorua Lakes Council's proposed District Plan Change 6, which aims to regulate short-term rentals. If adopted, properties rented out for more than 60 nights per year would require resource consent and face stricter standards for parking, noise, and occupancy. Stay informed on the outcome of this plan change.
2. Choose a suitable property: Look for properties in popular Rotorua suburbs like Lynmore, Owhata, or near the lakes. Consider factors like proximity to attractions, parking, and outdoor space. Analyze potential rental income using tools like BNBCalc.
3. Obtain necessary permits and licenses: Once Plan Change 6 is finalized, apply for resource consent if required based on your intended rental nights. Ensure your property meets all building, fire safety, and health regulations. Register for GST if your annual turnover will exceed $60,000.
4. Set up your business entity: Decide on a business structure (sole proprietorship, partnership, or company) and register with the Companies Office. Open a separate bank account and obtain an IRD number for tax purposes.
5. Furnish and equip your rental: Invest in quality furniture, linens, and amenities that appeal to your target guests. Install safety features like smoke alarms, fire extinguishers, and first-aid kits. Provide a guest welcome book with house rules, local recommendations, and emergency contacts.
6. List your property on booking platforms: Create attractive listings on popular sites like Airbnb and Bachcare. Hire a professional photographer, write compelling descriptions, and set competitive rates. Consider using a dynamic pricing tool to optimize your nightly prices.
7. Automate your operations: Use vacation rental software to manage bookings, guest communication, and cleaning schedules. Set up online check-in and digital guidebooks for a seamless guest experience.
8. Partner with local service providers: Build relationships with reliable cleaners, maintenance professionals, and concierge services. Ensure your property is well-maintained and guest-ready at all times.
9. Promote your listing: Leverage social media, paid advertising, and email marketing to attract bookings. Encourage satisfied guests to leave reviews and offer incentives for repeat stays or referrals.
10. Stay on top of financials and taxes: Keep accurate records of all income and expenses related to your rental business. Work with an accountant to claim eligible deductions, file GST returns, and prepare your annual income tax return.

By following these steps and staying attuned to Rotorua's evolving short-term rental landscape, you can build a successful and compliant vacation rental business. Focus on providing exceptional guest experiences, optimizing your listing, and adapting to regulatory changes to thrive in this competitive market.

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

If you have questions about Rotorua's short-term rental regulations or need assistance with compliance, here are some key contacts and resources:

Rotorua Lakes Council Rates Department

For inquiries related to rates classifications for short-term rentals, contact the council's Rates Department:

1. Phone: 07 348 4199
2. Email: info@rotorualc.nz

Rotorua Lakes Council Planning Services

For questions about resource consents, zoning, and District Plan requirements, reach out to the council's Planning Services team:

1. Phone: 07 348 4199
2. Email: planning.info@rotorualc.nz

Rotorua Lakes Council Website

The council's website provides detailed information on proposed changes to short-term rental rules under District Plan Change 6. Visit https://letstalk.rotorualakescouncil.nz/District-Plan-Plan-Change-6-Holiday-Rentals for FAQs, submission forms, and updates on the plan change process.

Online Host Communities

Connecting with other local hosts can be a valuable way to share experiences, get advice, and stay informed about regulatory developments. Some active online communities for short-term rental operators include:

Rotorua Subreddit: https://www.reddit.com/r/rotorua/

While not exclusively for hosts, this subreddit is a good place to ask questions and engage with locals knowledgeable about the Rotorua rental market.

BiggerPockets NZ Forum: https://www.biggerpockets.com/forums/55/topics/175363-new-member-in-rotorua-new-zealand

BiggerPockets has a dedicated forum for New Zealand investors, including discussions on short-term rentals in Rotorua and other cities.

By contacting the right council departments and participating in online host communities, you can stay informed and get support as you navigate Rotorua's evolving short-term rental landscape. Building relationships with other local operators can also lead to valuable insights and partnerships.

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

Discussions on Reddit and BiggerPockets provide some insights into how short-term rental hosts in Rotorua feel about the evolving regulatory landscape:

On the Rotorua subreddit, a post titled "Airbnbs in NZ love their fines" sparked a conversation about the strict cleaning requirements and potential fees imposed by some Airbnb hosts. While not directly related to regulations, it highlights the challenges guests face with short-term rentals and the desire for more standardization.

In a post on the New Zealand subreddit discussing proposed policies to regulate Airbnb rentals, one commenter noted the issues in Queenstown, where a lack of long-term rentals has made it difficult for workers to find housing. They suggested that "regulating the AirBnB market to have similar a status and obligations as commercial Hotels and Motels will at least encourage the rental market towards favouring long-term rentals once more."

On BiggerPockets, a new member from Rotorua shared their interest in investing in rental properties, stemming from a negative experience with a landlord. While not explicitly about short-term rentals, it underscores the broader housing challenges in the city.

A Rotorua Daily Post article shared on the New Zealand Herald website outlined the council's proposed changes to rating policies for short-term accommodations. One bed and breakfast owner said the plan "beggars belief" as some hosts face potential rates increases of up to 180%. The council maintains that short-term rental owners need to pay their "fair share" given Rotorua's housing shortage.

Overall, these online discussions suggest that while some Rotorua hosts are concerned about the financial impact of new regulations, there is also recognition of the need to balance tourism with housing affordability for residents. As the council moves forward with its proposed changes, engaging with local host communities will be key to finding workable solutions.

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.