Auckland's Airbnb rate, pot of gold or problem?

Wednesday, 8 August 2018

Thousands of Auckland dwellings rented out on Airbnb and similar websites must pay higher rates

OPINION: Is Auckland Council's new 'Airbnb' rate a pot of gold, or a crock of you-know-what?

The move to charge higher rates on dwellings offered to visitors via booking websites seemed like a good idea at the time - to the mayor at least.

Now, six weeks old, it doesn't seem to be going so well.

Conservatively the council believes there are thousands of liable properties it hasn't found.

* Auckland Council cannot find all online accommodation providers subject to new rates

* Auckland council targets Airbnb and Bookabach properties for higher rates**

Most of those it did find haven't replied to an initial mailout and have been slugged with thousands of dollars in extra rates because they've yet to prove they are not liable.

Mayor Phil Goff wanted new sources of revenue, and pushed for a new rate for traditional tourist accommodation providers such as hotels and motels.

The original intention of raising $28 million to fund the city's tourism promotion was halved, following an outcry from the accommodation sector.

The sector argued that it got only a small share of the benefits of tourism, and even with the impost halved, is seeking a judicial review, due to be heard in May next year.

One of the sectors' criticism was that it was unfair for them to pay more, while individuals effectively running small businesses renting out flats and dwellings to tourists, didn't.

Goff heard the message, and led the widening of the contentious targeted rate to the 'online' sector, from July 1.

That's when it really got tricky.

The council had no idea how many rateable 'Airbnb properties' there were, or where they were.

For the first time in its eight-year history it was introducing a rate on properties unknown to it.

Prior to the rate's introduction, council staff scoured websites and came up with 1400 properties it thought were liable.

It wrote them a letter seeking a statutory declaration on whether they were in fact renting entire dwellings, to tourists, and for how many nights in the past year.

Airbnb also wrote to its hosts, but only those who in signing up to its website, had ticked that they wanted to receive 'marketing material'. The council doesn't know how many that is.

The new rates are complicated. If an entire dwelling deemed to be 'self-contained ' is rented for more than 180 days a year, it gets charged Business rates, not Residential.

Then the new targeted rate for the accommodation activity is layered on top.

For a $1.5m dwelling, that's $2338 extra for the Business rate, and another $5200 for the targeted rate.

A sliding scale of rating levels kicks in from 28 rented days onwards.

In the latest count, 241 properties have been checked and rated correctly below the 180-day threshhold.

A total of 781 are still in the 180-plus category, but include an unknown number which are there because they haven't yet replied to a council letter.

Based on Airbnb data, the council believes there's another 2600 liable properties that it hasn't managed to find. Not found, means not paying.

It also doesn't know whether there are properties listed only on websites other than Airbnb.

This complicated new revenue gathering exercise is being managed by one full-time council staff member, and two 'temps' who also do other work, and only for the next two months.

'It's hard,' said acting chief financial officer Matthew Walker, when I asked him how it was going.

It seems to be hard too for some of those property owners caught in the net early.

Ray Pitch, who's challenging being rated as a business and paying full whack for renting out rooms in his Pakuranga basement is so cheesed off he's complained to the Ombudsman.

For one, he doesn't think his set-up counts as a 'self-contained' unit. He's awaiting the outcome of a recent visit by a council assessor.

What is a self-contained unit? I asked the council

While there are some guidelines, 'case-by-case basis' was the most-used phrase in the explanation.

The council is urging people who think they are being wrongly rated, to get in touch.

It doesn't yet have data on the outcome of appeals to the levels of ratings already imposed.

For those who decide the new costs are too high and unlist their properties, the heftier rates burden will continue all year. No way out until next year.

Should Phil Goff decide to run for mayor again next year, the judicial review of the hotel sector's targeted rate will play out as his mayoral election campaign ramps up.

Goff will be hoping the court finds in the council's favour.