‘The fabric of our community’s being destroyed’

A Queenstown hotelier concerned houses going onto Airbnb are destroying the residential rental market, believes the new National-led coalition government can solve the problem with one quick stroke of the pen.

The Rees’ Mark Rose says when the government carries out its promise to restore landlords’ ability to claim mortgage interest as a tax deductible expense, it should make an exception for those letting out their houses for short-term accommodation.

In short, while long-term residential rental owners would benefit from the tax break, Airbnb owners would not.

Because of the tax consequences, Rose says that would incentivise property owners to rent their homes long-term rather than Airbnb them.

‘‘And you just watch how many places would go back to long-term rental.’’

Rose says he got this ‘‘absolutely brilliant piece of advice from someone who knew what he was talking about, and it makes sense’’.

‘‘In my years, governments and councils don’t necessarily run on commonsense, but this, at the stroke of a pen, could change the crisis we’re facing in Queenstown.’’

Rose says the problem of landlords Airbnbing their properties rather than using them for long-term tenants is something he first alerted the council to in 2017.

‘‘But the problem’s getting worse and worse and worse.

‘‘People don’t seem to care about hotel workers, but when it starts affecting teachers and police, when young people don’t want to come to town because they can’t afford to live here, or can’t find a rental, the fabric of our community is being destroyed.’’

Legislation could solve Airbnb issues

Rose remains appalled the local council isn’t following the example of more and more cities around the world clamping down on landlords putting their homes on short-term accommodation platforms like Airbnb.

Council did try to restrict the number of days homes could be let out for visitor accommodation, specifically to improve the availability of houses for rent.

Instead, following mediation with parties, including Airbnb Australia Pty Ltd, an Environment Court order last year allowed landlords to Airbnb their homes for 90 days a year — as of right.

Mayor Glyn Lewers last year told Mountain Scene if his council could regulate Airbnb ‘‘we would try, but the legislative framework doesn’t
give us the same powers as the examples [Rose] raises overseas’’.

Rose therefore believes Queenstown’s best chance lies with central government.

‘Airbnb destroying the fabric of our community’: The Rees’ Mark Rose

Specifically, he thinks its promise to repeal the ousted Labour government’s rental property tax policy represents a unique window of opportunity.

He says the problem in Queenstown is there’s every incentive for property owners to put their properties on Airbnb due to the huge returns they get compared to long-term letting.

‘‘Many properties now just change hands to Airbnb them.’’

Rose stresses he’s not against people Airbnbing a room or holiday homeowners Airbnbing their places while they’re away.

However, he’s adamant those owning homes just to Airbnb them — often several homes — shouldn’t receive the same tax benefits investors in long-term rentals will, when the government restores interest deductability for rental properties.

It’s all about levelling the playing field, he believes.

‘‘There’s huge returns [for Airbnbing homes] but there’s a lot of hassle that goes with Airbnb — people trashing their house, getting them cleaned.’’

If the government doesn’t repeal the tax policy for these owners, he’s convinced many will revert to letting them out long-term.

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‘Sroke of a pen might work in a crisis’

‘Government can move fast’: New Housing Minister Chris Bishop

While Rose is adamant the government could tweak its proposed rental property tax policy repeal, to favour long-term landlords, at the stroke of a pen, he concedes the tweak could still take ‘‘months or years to be brought in’’.

However, the government’s new Housing Minister Chris Bishop endorsed stroke-of-the-pen action on Queenstown’s housing crisis when he spoke to a public meeting on that topic in April last year — when he was Opposition spokesman for housing.

Earlier that month, Labour’s Housing Minister Dr Megan Woods had told a Queenstown audience possible legislative change to improve
the situation was ‘‘something that takes a long period of time’’.

Bishop, however, told his audience the government could make changes quickly, instancing its legislative response to East Coast flooding.

Asked then why the Labour government wasn’t making changes ‘‘overnight’’ to solve the housing crisis, he responded: ‘‘I agree with you, and they could do it next week.’’

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MP: ‘Have passed on idea to Finance Minister’

‘Blaming previous government: Southland MP Joseph Mooney

Queenstown-based National MP Joseph Mooney says he put Rose’s idea, on exempting residential short-term visitor accommodation from the government’s planned restoration of interest deductability, to Finance Minister Nicola Willis.

Details of the phase-in of that policy will be announced later this year, Mooney says, but he can’t foreshadow what they’ll be.

‘‘Interest deductability allows landlords to deduct mortgage interest payments from their rental income for tax purposes,’’ he says.

‘‘In 2021, the Labour government announced plans to phase out the deduction of interest against income derived by residential landlords.

‘‘These changes meant landlords couldn’t offset interest payments against their rental income, adding to their tax burden, and together with high interest costs has helped create all-time high rental costs, and contributed to fewer houses being available for long-term rentals.’’

Meantime, in response to Rose’s idea, local councillor Craig ‘Ferg’ Ferguson says ‘‘housing’s always front and centre’’.

‘‘Council has tried their best to get to a level playing field, or a more even playing field, but it hasn’t transpired that way.

‘‘Everything should be looked at.’’

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