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The danger of an Airbnb crackdown in Queenstown

Phil Andrew is a busy man. The Queenstown entrepreneur owns, manages and operates three companies – The Water Stain Doctor, WaterSpot and Grout Perfect New Zealand. As if that isn’t enough, he and partner Bex rent out rooms on Airbnb, as “superhosts”.

Their Queenstown house, in the satellite suburb of Shotover Country, was finished about a year ago. They offer a bunk room and a queen room with ensuite, charging between $80 and $100 a night.

It’s not a big money-spinner. Andrew, 49, reckons they get about $US5000 a year through short-term lets.

“We don’t rely on Airbnb. But I can tell you there are a lot of people in our area, who have just built new houses, who absolutely rely on Airbnb income to prop up their mortgage payments, because of the cost of building and the size of mortgages.”

You can see why. In sales confirmed earlier this week, a 400-square-metre section at Shotover Country sold for $315,000, while the average house price is now over $1 million, leaving many with eye-wateringly-high mortgages.

Veteran real estate agent Kelvin Collins, the CEO of Harcourts Queenstown, says the rise of Airbnb has “certainly helped debt servicing for a lot of people”. (However, he says people are wary of earning more than $60,000 a year from their rentals, which may trigger a tax department threshold to be GST-registered.)

Andrew and his partner, who moved to Queenstown from Canterbury and Auckland, aren’t the only ones cashing in on the resort town’s unprecedented growth. Last summer, Andrew says he was one of two Airbnb users in his neighbourhood. Now there are more than a dozen. Airbnb’s website shows more than 130 listings in Shotover Country, by Newsroom’s count.

The explosion of Airbnb and other online accommodation booking agencies has put money in the pockets of investors and home-owners with spare rooms. In Queenstown, it’s provided extra beds during an accommodation shortage.

There are an estimated 2000 Airbnb listings in the Queenstown-Lakes district, almost one-in-10 houses (earning $17.2 million in the 12 months to March this year, according to Infometrics). Airbnb rooms now occupy 14 percent of Queenstown’s visitor accommodation market. There’s also more money sloshing into the short-term visitor economy, the cleaning and property management firms which service them.

It’s undoubtedly taken long-term rentals out of the market, pushing up rents in an already hot market.

(Airbnb didn't initially respond to Newsroom's request for comment. Today, in an emailed statement, the company's Australasia head of policy Brent Thomas issued a strong warning against harsh regulation of what he calls an “economic lifeline” for some people and small businesses in Queenstown. “Airbnb has been proactively and in good faith talking with Queenstown Lakes District Council about fair, forward-looking policies that will benefit Queenstown and grow the tourism pie. However, our community will strongly resist any back-to-the-future or innovative-denying policies which would only serve to rob people of their rights, exacerbate the hotel shortage and cost local jobs.”)

The pull for home-owners to rent out rooms to visitors is obvious. In Andrew’s suburb of Shotover Country they can get $100-a-night per room, or higher, in peak season. And there’s the flexibility of blocking off dates if they’re, say, on holiday themselves or have family staying.

Airbnb rooms now occupy 14 percent of Queenstown’s visitor accommodation market.

But the rise of online booking services has also created headaches for Queenstown’s council. A lack of worker accommodation has put pressure on the council and government to step in, possibly using council or Crown land. A mayoral taskforce into housing affordability has suggested property owners are offered incentives to rent to the long-term workforce.

Queenstown mayor Jim Boult agrees the council rules on visitor accommodation aren’t working.

“The difficulty with these things is compliance; how do you police it? It relies to a very large extent on honesty and there are thousands of listings on the internet for homes in our district so it’s virtually impossible for staff to follow through every one of them.

“However, we’re attempting to simplify the process and make it more apparent to people who are using Airbnb and other providers that they do need to recognise they do have to pay a commercial rate.”

You have to feel for the council. A twin boom in construction and tourism has left the town’s infrastructure creaking. The council needs to rake in as much dough as it can to try and keep pace with spending on things like roads, parking and water and sewage pipes.

More tourists require more workers to serve them, but the question of where the workers can affordably live is putting many off. Skifield operator NZSki, which runs Coronet Peak and The Remarkables, took the desperate step of advertising in school newsletters, begging local people to open their homes to its workers.

A crackdown from Queenstown's council pulled in higher rates from 559 properties. Photo: Alan Lam

Boult says all sorts of changes to its visitor accommodation policies will be considered but he rules out a wholesale Airbnb ban.

“Right at this point in time the number of people that are using Airbnb accommodation works out to be the equivalent of about half a dozen 150-room hotels.”

Technology commentator Peter Griffin agrees a ban isn’t the way to go.

“The way to do it is to negotiate with Airbnb and there’s precedent for that already with the addition of GST to online transactions, with the like of Apple and Amazon. So it’s definitely doable.

“It’s a matter, really, of whether you do that at a national level or a regional level, because they all have different policies around charging hotel taxes.”

Griffin notes Airbnb users around the world are increasingly being hit with local taxes. They include Bologna, in Italy, Mexico City and in various states in the United States.

Queenstown is on a slippery slope to becoming New Zealand’s Aspen with only the wealthy owning property and working-class people being forced to live elsewhere.

“Probably the biggest negative of Airbnb is that underground economy of people who are basically running a commercial business but not subject to the same rules, regulations and taxes that their peers in the hotel and motel industry are.”

In January, Queenstown’s council wrote to almost 800 property owners, warning that they face a $300,000 fine or two years in jail if convicted of flouting its rules.

(There’s no limit for registered people letting rooms, but entire homes can only be let for up to 90 days – more than that and they require a resource consent.)

The council crackdown has pulled in higher rates from 559 properties. Forty-six property owners were whacked with a $300 fine for not even replying to the council.

But that’s not enough, it seems. Like many tourism hotspots around the world, Queenstown wants a bit more of the pie from Airbnb.

Boult’s been pushing the Government to allow his council to introduce a visitor levy, probably a per-bed charge for staying in Queenstown. Such a tax in Queenstown would take pressure off the council to chase individual property owners, he says.

But Airbnb-user Andrew says if the council did that it would be taxing people like him “with two hands” – for the levy and higher rates. He says his short-stay sideline is legitimate – he pays tax on that income and higher rates to the council. He says being hit with a visitor levy might be the final straw for some Queenstown people, who are using Airbnb income to offset Queenstown’s high cost of living.

Queenstown is on a slippery slope to becoming New Zealand’s Aspen, Andrew says, with only the wealthy owning property and working-class people being forced to live elsewhere.

“The workers can’t really afford to be here because there isn’t the property around at an affordable rate to stay in and you’re forcing the working-class families out. We’ve got our immediate neighbour who’s just built a new house in the last eight months, they’re moving to Takaka because they can’t afford to live here anymore.”