Queenstown keeps clamps on holiday lets


Queenstowners with a spare room and anyone with a holiday house in the resort will have to wait and see how the council responds to the relentless rise of peer-to-peer websites such as Airbnb. Guy Williams reports.

House owners were rubbing their hands in glee a few months back at the prospect of more permissive rules for peer-to-peer accommodation in Queenstown Lakes district.

They were left disappointed when those rules were yanked from the council’s proposed district plan at the 11th hour last October.

After flirting with tinkering, councillors voted to withdraw all visitor accommodation provisions from the first stage of the district plan review.

They have kicked the issue to stage two of the review, which starts early next year.

In doing so they rejected the recommendations of council staff and the findings of an independent economic analysis.

As is the case everywhere, more and more tourists visiting Queenstown are demanding home-style accommodation.

Property owners, attracted by the opportunity to let their holiday home or spare room for $300 a night or more while continuing to use their property when they want, are signing up in droves with peer-to-peer websites such as Airbnb and Bookabach.

Those are just two of dozens of websites listing an estimated 2000 properties available for nightly let in the resort.

The council’s dilemma is that most peer-to-peer providers are failing to register with the council, thereby dodging paying higher rates or the need to apply for a resource consent.

Queenstown deputy mayor Lyal Cocks says councillors put the proposed rules on ice out of concern a more permissive regime would accelerate the drift of houses towards the peer-to-peer sector.

The consequent upward pressure on rents would hurt the community, while a further squeeze on the supply of housing for Queenstown’s workforce, especially those on low incomes, would hurt Queenstown’s economy.

Above all, councillors realised the issue was more complex than they initially thought, and asked staff to make a deeper analysis, he says.

Cocks says the council faces a difficult balancing act of recognising visitors’ demand for home-style accommodation while avoiding making the long-term rental market any worse.

It also has to account for differences between Queenstown and Wanaka and smaller communities such as Arrowtown and Glenorchy.

Another benefit of holding off on new peer-to-peer rules is that issues covered in the first stage of the district plan review, such as medium-density zoning, will be clarified and feed usefully into the issue, he says.

Insight Economics managing director Fraser Colegrave told district plan review commissioners this week the peer-to-peer sector already made up more than 15 per cent of the district’s accommodation offering.

He predicts that percentage will keep rising, and warns of ‘‘unintended consequences” for the district’s tourism industry from clamping down on the peer-to-peer sector.

Documents released to the ODT under the Local Government Official Information and Meetings Act show council planning staff wrestling with the complexities of the issue for nearly two months before the council’s October 23 decision.

Their starting point was proposed rules allowing property owners to let their properties for up to 180 nights a year as either a permitted or controlled activity. Registration was to be required after exceeding 28 nights.

In an October 5 email, then district plan manager Matthew Paetz responds to a colleague’s suggestion the threshold for a resource consent be raised from the existing 90 nights to 180.

He says the move would be a ‘‘disaster for rental housing supply” because the decision to switch to peer-to-peer would become a ‘‘financial no-brainer” for property owners.

In another email two days later he gives a back-of-an-envelope calculation illustrating the point.

A three-bedroom house could be let for $600 a week, returning $31,200 in a year. If the same house was let at $300 a night for only 180 nights, it would return $54,000.

After a workshop with councillors on October 6,  Paetz commissioned Insight Economics to prepare a report on the issue to inform the full council’s decision later that month.

Although the final report was not given to the ODT, Paetz summarises its findings in an email to councillors on October 12. He says Insight favoured a more liberal approach on the grounds many property owners were not complying with the rules anyway, and any attempt to beef up enforcement was ‘‘bordering on futile”.

Insight’s view was the peer-to-peer sector benefits the district’s tourism sector, and the council is better to address the rental housing shortage through other means such as special housing areas and zoning changes, he says.

Cocks concedes a deeper analysis by council staff during the next 12 months may lead them to reach the same conclusions they reached six months ago.

Either way, the community will have to live with the existing, imperfect rules for a while longer, he says.

Otago Daily Times