Short term rental services like Airbnb, Bookabach or Bachcare can provide a convenient income stream for people who have a room going unused, or a bach they don’t visit for 11 months of the year.
Sounds great, but if you’re looking to start up a rental of your own there are some things to be mindful of.
If you want to rent out a room for a little extra money, what do you need to know?
Some rules will depend on your local council. You may be required to register your property if it is being used as short term accommodation. Some city councils, like Christchurch and Nelson, require some people in residential zones to apply for resource consent to rent out a house as holiday accommodation.
In Auckland, renting out a house as holiday accommodation also means an increased rates bill.
If your Auckland property is rented out for more than 28 nights per year you will need to pay business rates.
These are graduated based on a number of factors including how many nights the property is rented out, but will be higher than residential rates.
You should also consider your tax obligations before you begin.
Inland Revenue require you to keep records of all income earned and declare it in your tax return, as well as records of any expenses that are claimed as tax deductions.
You may also need to pay GST on the rental income you make, depending on the amount of income and the property ownership structure.
Insurance should be a consideration too. Some house and contents policies may not cover you if something happens while your property is rented. Your insurer will be able to provide advice about what your current policy covers, and whether you require extra cover to be protected while renting out your property.
If something goes wrong, insufficient insurance cover is the last thing you want to be worrying about.
There’s nothing worse than a short-term rental, motel or hotel that talks a big game, but doesn’t deliver. (Source: Fair Go)
If the property you’re thinking of renting out is an apartment or unit, make sure that your body corporate allows for short term rentals. Some body corps, particularly in apartment buildings, have rules against this.
Now that you’ve got your ducks in a row, it’s time to bring in the guests.
Make sure that you have a written agreement of terms and conditions with anyone staying in your property.
Hosting sites like Airbnb and Bookabach allow you to include these in your listing, which makes it simple for guests to agree to them.
Any rules should be clearly put in writing, and include how many people can stay, for how long, and how much you expect them to pay.
Remember, short term rentals are covered by the Consumer Guarantees Act (CGA) and the Fair Trading Act. If you are advertising your holiday rental, make sure any pictures or descriptions you use provide an accurate representation of the property. If you have promised something to a guest, make sure you are prepared to provide it.
Under the CGA accommodation must be of a reasonable standard and fit for purpose, which means it should be relatively clean and able to suitably accommodate the number of people it is advertised for.
Give some consideration to health and safety. Owners of holiday rentals can be subject to the duties and obligations in the Health and Safety at Work Act 2015, which puts them at risk of fines or prosecution if a guest is injured. Accommodation should have working smoke alarms, no obvious hazards like toxic chemicals stored in the open, and balconies and pools should be fenced off.
If you want to install recording devices of any kind (video or audio) in the rental, you must let guests know. According to the Privacy Act, any recording must be done only for lawful purposes, should be disposed of securely once no longer needed, and should minimise the amount of personal information that is collected. If a guest requests access to any recordings you have of them, you must give it to them
As with any business endeavour, make sure to do your research before embarking on a new venture.
Short term rentals have changed the game for holidaymakers from all over the world, and they can be a great way to make use of space that you have going unused. Just make sure that you understand your obligations beforehand, so that you don’t have any nasty surprises along the way.
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