Queenstown’s Airbnb crackdown explained

Diehard rulebreakers are the short-term target of the Queenstown council’s crackdown on visitor accommodation.

The council made national headlines last week for wanting to tighten rules for people letting their house or rooms out to visitors on platforms such as Airbnb, Booking.com and Bookabach.

But the proposed new rules are, in fact, a bit of a time capsule. The planned changes – restricting the allowable short-term lets in some neighbourhoods from 90 days down to 28 days, in three separate lets – will be publicly notified for comment on November 23. After that they’ll enter the slow-grinding wheels of bureaucracy, feeding into the council’s district plan review. Final decisions will be made after hearings – so presumably well into next year.

The council admits it expects many existing operators to continue to let their properties out to tourists.

Planning policy manager Ian Bayliss tells Newsroom: “However, there seem to be a number of people who currently are operating unlawfully without a consent who are likely to need to seek a consent to continue.”

That’s despite a crackdown earlier this year. In January, the council wrote to 800 property owners, warning that flouting visitor accommodation rules could mean they face a fine of $300,000 or two years in jail if they were convicted. As reported last week, the council is now getting higher rates from 559 properties. But 46 property owners were slapped with $300 fines for not even responding.

According to the Otago Daily Times, at last week’s urgent council meeting Bayliss said the current district plan is “essentially allowing people to operate similar to a commercial hotel in a residential area”.

In some cases, suburban houses are turning into mini-hotels, as vans pick up and drop off a steady flow tourists from shared driveways.

Queenstown councillor John MacDonald, who led a mayoral taskforce earlier this year on housing affordability, remarked to Radio New Zealand last week: “Where are the workers going to live? Where is the community? What’s the community spirit going to be like?”

The council’s quick embrace of the proposed new rules sends a clear message to home-owners in the district, especially absentee owners who are preferring the revenue returns from tourists over long-term workers.

Not as punitive

But the rule changes are not as punitive as first thought. It’ll be relatively easy for existing visitor accommodation operators, who have already registered with the council to pay higher rates, to continue doing exactly that.

Queenstown lawyer Maree Baker-Galloway, a partner at Anderson Lloyd, says under section 10 of the Resource Management Act, an activity can continue, even if it breaches a new rule, as long as it was lawfully established before the proposed plan is notified.

“Key is ensuring the ‘intensity and scale’ remains the same, from now on, continuously, without triggering the loss of that existing use right by discontinuing at the same intensity and scale for 12 months.”

The new regime is more restrictive, but it only applies to the cowboys, who haven’t registered with the council, and potential new users, who will have to apply for resource consent to operate beyond 28 days and face an uphill battle to get one in low-density, suburban neighbourhoods.

(Baker-Galloway points out several suburban neighbourhoods escape the council rules, at least initially, because they are “special zones”. These include Quail Rise, Frankton Flats, Shotover Country and Bendemeer.)

Bayliss confirms there are several avenues for home-owners to protect their visitor accommodation operation.

One is to get a certificate of compliance, which demonstrates their activity is lawful. That would have to be done before the proposed new rules are notified.

Bayliss: “A certificate of compliance would protect their activity moving forward unless the character, intensity, and scale of the activity changes.”

Another potential protection is an existing use certificate. These are for people who don’t comply with a new set of rules but would have complied under the previous regime.

Compared with the relatively easy road for existing operators, compliance could pose problems for new Queenstown operators. In the medium-to-long-term, when the new rules come in, those eyeing up Airbnb and other letting sites will be the council’s target.

“New houses are likely to be constrained if the rules come into effect in their current form,” Bayliss confirms by email.

The rise of Airbnb

Airbnb says it’ll fight Queenstown Lakes District Council’s attempt to regulate short-term lets. Why wouldn’t it? According to a Queenstown council-commissioned report by Infometrics, Airbnb listings increased by 61 percent in the 11 months to August this year.

On the other hand, the council had to move. While Airbnb was picking up houses usually rented to workers, Queenstown became the least affordable place to live in the country. According to Interest.co.nz, the house price to household income “multiple” in the Queenstown-Lakes district is 12.67. That contrasts a median household income of $72,611 with the median house price of $920,000. An “affordable” multiplier is considered to be three or less. The only areas in that bracket are currently Whanganui (2.58) and Invercargill (2.83).

So even if workers could afford to live in Queenstown, with the rise of Airbnb and other peer-to-peer platforms there are fewer places to live. However, if the council clampdown on short-term lets is effective the resort town might face another issue. Where will all the tourists stay? Baker-Galloway says with a shortage of hotel rooms in the resort, the answer to that question is unclear.

Anecdotally, the council’s January crackdown on short-term lets has already had an effect. Last year, some home-owners were cashing in big time, as tourists swarmed into town and the council failed to wield a stick to enforce its rules. But when the council’s enforcement letter went out in January, that jolt of reality convinced some it was easier to rent their empty homes to long-term workers.

(The council’s having a successful year for enforcing rules. In June, it sent terse letters to 50 home-owners at Shotover Country – across the Shotover River from Queenstown Airport – to say they faced fines of $750-a-day if they didn’t comply with local fencing rules. Fence palings were ripped off in short order.)

There are fears, however, that some people might be trapped in the visitor accommodation game as they chase high returns to service big mortgages. The bad news for them is Queenstown’s property market has cooled. Council regulation of visitor accommodation might be the least of their worries. If the market corrects then some people in this boom-and-bust resort town might find themselves sliding down a slippery slope towards negative equity.

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