Airbnb Rules in New Zealand | Airbnb Laws, Taxes, and Regulations

In recent years, Airbnb has revolutionized travel around the world and it's no surprise that Airbnb has been successful wherever it has set up shop, including in New Zealand. In 2015, Airbnb expanded into New Zealand, connecting guests and hosts to facilitate short-term stays. Thus enabling New Zealand locals to list and book accommodations on Airbnb, their peer-to-peer platform, which supports access from around the world, including in 225 New Zealand locations.

Should you invest in an Airbnb in New Zealand ?

It can be extremely rewarding to become a host on Airbnb, both financially and for your guests, as well as for New Zealand's economy. While it can seem daunting, if you follow the right protocols and adhere to the governing laws and regulations, you may be able to turn this process into one of the smartest investments of your life.

One of the most important things before setting up your listing on Airbnb is understanding the local laws, rules and regulations governing the country. Understanding the regulations is a vital part of the planning process.

To assist you in becoming a successful Airbnb host and generating revenue from your investment, this article is intended to break down the details and give you a comprehensive understanding of what laws, taxes and regulations you must consider;

The Impact of Airbnb in New Zealand

Airbnb is rapidly growing in popularity each year, with no signs of slowing down. Kiwis are renowned for being some of the happiest, friendliest and most welcoming people in the world. In fact, according to the United Nations Sustainable Development Solutions Network’s 2020 World Happiness Report, New Zealand is ranked as the 9th happiest place on Earth.

Airbnb contributes to New Zealand’s tourism industry by facilitating accommodation bookings with local hosts. In towns and cities throughout New Zealand, around 25% of trips which are booked are contributed by stays in Auckland, followed by Queenstown, Christchurch and Wellington which account for the top four destinations in New Zealand.

A report on the accommodation and sharing economy in New Zealand, published in 2019, The Stats NZ report, found that home sharing accounted for 18.3 percent of guests' nights in 2018 - up from 8.3 percent in 2013. The report estimates that home sharing contributed more than NZ$300 million to gross output by 2018, up from NZ$100 million in 2013.

Home sharing has grown and become an increasingly important part of New Zealand tourism, says Airbnb's Head of Public Policy for Australia and New Zealand Brent Thomas. The report confirmed the benefits home sharing has on New Zealand's tourism industry and economy. Which is a great place to start when investigating if you should invest in this beautiful country.

Kia Ora! Discover - the Land of the Long White Cloud

Fondly known as the "Land of the Long White Cloud", (Aotearoa) New Zealand is truly one of the world's most scenic and photogenic places on earth. Located in the southwestern Pacific Ocean, New Zealand is an island nation with just over 4.5 million people. It consists of two major landmasses (North Island and South Island) and several smaller islands. The two main islands are divided by a 22km stretch of water called the Cook Strait.

"Kiwis" is an affectionate term for New Zealanders. The name derives from the Kiwi, a flightless bird native to New Zealand. A national symbol of the country. The country is home to some of the most spectacular landscapes in the world, from epic mountain ranges to steaming volcanoes to sweeping coastlines. It is a paradise for thrill-seekers and adventurers, as well as those who simply want to see the culture and landscapes of the region.

Tourism contributes significantly to New Zealand's economy and attracts tourists from every part of the world. New Zealand's short-term rental property investment sector has experienced phenomenal growth in recent years. By building a strong portfolio, investors can expect to enjoy regular rental income, terrific capital gains, and an enviable retirement nest egg.

The Best Neighborhoods for Airbnb in New Zealand

Here are some of AirDNA’s statistics for the best neighborhoods to look into when investing in an Airbnb in New Zealand

Auckland, NZ

4,049 Active Rentals of which 79% is listed on Airbnb Average Daily Rate NZ $211 Occupancy Rate 48% Median Revenue NZ$ 2,024

Welligton, NZ

2265 Active Rentals of which 78% is listed on Airbnb

Average Daily Rate NZ $ 180 Occupancy Rate 61% Median Revenue NZ$ 2212

Christchurch City, NZ

1919 Active Rentals of which 81% is listed on Airbnb

Average Daily Rate NZ $ 162 Occupancy Rate 57% Median Revenue NZ$ 1840

Queenstown, NZ

1,673 Active Rentals of which 64% is listed on Airbnb

Average Daily Rate NZ $ 369 Occupancy Rate 40% Median Revenue NZ$ 3396

The housing market in New Zealand is quite varied and you would have options including suburban homes, rural living and lifestyle blocks, apartments, flats and townhouses. Housing in New Zealand is a great resource to find out more information.

Airbnb Laws Taxes & Regulations in New Zealand

Many investors are eager to get in on Airbnb short term accommodation options. However, some councils have passed legislation to introduce higher rates and tighter regulations, which means you need to consider legal implications if you plan to purchase a property or use your existing property as a short-term rental property.

Short-term rentals with Airbnb in New Zealand: Things to consider

1. Creating and enforcing a short term rental agreement
2. Tax obligations
3. Insurance
4. Health and safety and consumer laws
5. Claimable expenses and record-keeping

__Side Note: __ Check out the local council rules on short-term accommodation — some councils require you to register properties which are rented out.

Rental Agreements

When a house you own is used as a holiday rental, you’re not covered by the Residential Tenancies Act. This means standard rental agreements don’t apply.

Some hosting sites, like Airbnb, include booking terms and conditions in your page listing. If terms and conditions aren’t included when you list your rental, you’ll need to create and enforce a written short term rental agreement outlining your terms and conditions.

The agreement should cover rules and expectations about:

1. Payments, including deposits and refunds
2. Maximum number of guests
3. Pets
4. Camping, e.g. extra guests can/can’t pitch a tent on the lawn
5. Smoking/non-smoking
6. Liability, e.g. if someone has an accident on your property.

Side Note: If you use a template provided by your preferred hosting website, make sure it suits your situation and covers everything you need it to.

If you are a Landlord

You can’t ask tenants to move out temporarily so you can make more money over the summer by using the property for Airbnb or similar.

If your tenants decide to sublet the property while they’re away, they need your permission and must abide by their tenancy agreement. They can’t sublet the property without your permission.

Subletting — Tenancy Services

Tax Obligations

Income you receive for providing accommodation, including through websites like Airbnb, is taxable. This includes any payment for one-off or irregular rentals. Special tax rules apply to calculating income and expenditure from short-term rental accommodation (also known as short-stay accommodation) depending on the type of property and its use.

1. You must include the income on an Individual tax return (IR3). This can be filed online via your myIR account — for most people it’s due 7 July.
2. You can claim expenses for the time you rented out the property/ space, e.g. rates, insurance, cleaning and advertising – refer to the special tax rules for your property type and use.
3. You must keep clear records to confirm all income and expenses.

GST rules apply if your income is over $60k in a 12-month period. They also might apply if you offer guests meals, cleaners or other services in addition to accommodation. If you’re not sure, check with Inland Revenue — or your accountant, if you have one.

Sharing economy & short-term accommodation — Inland Revenue

Special Tax Rules

Inland Revenue has a number of publications on short-stay accommodation to help you work out which rules apply depending on the type of property and use, eg, the “standard rules” or “mixed-use asset rules”.

You can start with Inland Revenue’s short-stay accommodation overview, which has a flow chart to work through which rules apply to your type of property and its use.

Short-stay accommodation overview — Inland Revenue

Claiming Expenses

You can only claim expenses if you declare your rental income in your tax return. The special tax rules may limit the expenses you can claim depending on the type of property and how long it is available to rent. These rules provide guidance for working out how to calculate your income, expenses and taxable income that you must include in your income tax return.

Keep in mind:

1. Keep clear records to confirm all income and expenses.
2. Expenses you can claim include rates, insurance, cleaning and advertising.
3. You can only claim expenses for the time you rented out the space/ property.
4. If you're renting out a room, you can only claim a proportion of your household expenses.

Holiday Homes you Rent out and Use yourself

The "mixed use asset rules" apply if you have a mixed-use holiday home where:

• You stay in the holiday home yourself sometimes
• You rent it out to others sometimes
• It's not used for a total of 62 days or more during the tax year — or the same proportion if you buy or sell it partway through a tax year, e.g. a total of 31 days if you sell six months into a tax year.
• If you have a mixed-use holiday home and you earn less than $4,000 a year from renting it out, you don't need to include this income in your annual tax return. If you choose not to declare this rental income, you won't be able to claim expenses for the holiday home either.

Income tax rules for mixed-use assets — Inland Revenue GST for mixed-use assets — Inland Revenue Keeping tax records

Insurance

Your usual house and contents insurance might not cover you if something happens while your property is rented out. Speak to your insurer — you may need to pay a higher premium or arrange extra cover, but this is better than finding out too late that damage isn’t covered. Talk to your insurer about cover for:

• Theft or damage by short-term holiday tenants
• Cover during times the property is empty
• Loss of income — if something major happens and you are unable to rent the property out.

As well as cover for the property and contents, consider public liability insurance. This is cover to protect you if a guest gets hurt while staying at your property.

Airbnb Host Damage Protection and Host Liability Insurance

AirCover includes Host damage protection and Host liability insurance, which provide you with basic coverage for listed damages and liabilities. However, these don’t take the place of homeowner's insurance, renter's insurance, or adequate liability coverage. You might need to meet other insurance requirements as well.

We strongly encourage all Hosts to review and understand the terms of their insurance policy coverage. Not all insurance plans will cover damage or loss of property caused by a guest who books your accommodation.

Learn more about AirCover.

Liability and Basic Coverage

Review your homeowner's or renter's policy with your insurance agent or carrier to make sure your listing has adequate liability coverage and property protection Insurance

Health and Safety Adherence

Check whether there are any regulations you need to comply with — your local council is a good place to start.

E.g.

• Fit smoke detectors throughout the property and check these are in working order every three months.
• Any deck more than 1m high has a fence of at least 1m high right around it.
• Any pool deeper than 400mm is fenced.
• Hazardous items like chemicals and poisons are properly stored and kept out of sight.
• Any kayaks or boats provided for use are seaworthy and life jackets are provided.

Key recommendations on cleaning

Recommendations on cleaning and disinfection from the New Zealand Ministry of Health An explanation on how to read chemical labels from the New Zealand Environmental Protection Authority

General resources COVID-19 resources issued by the New Zealand Ministry of Health

Safety Emergency Procedures

Contact info

Indicate local emergency numbers and the nearest hospital. Provide a clear emergency contact number for yourself, as well as backup, for easy guest reference. Also make clear how you should be contacted if the guest has questions or issues arise.

Supplies

Make a first aid kit easily available.

Fire Prevention

Ensure you have a functioning smoke alarm and carbon monoxide detector, and that your property meets government safety guidelines for your area (e.g., International Building Code). Ensure you provide a functioning fire extinguisher and complete required maintenance.

Exits

Ensure you have a clearly marked fire escape route, and post a map in your home in order to minimize hazards

Privacy

Respect your guests' privacy at all times. Include information about whether there are security cameras or other surveillance equipment at or around your listing. Comply with applicable laws at all times, whether they are federal, state, or local.

Occupancy

Establish safe occupancy limits - refer to local government guidelines.

Access

Look for potential trip and fall hazards throughout your home, and either remove or clearly label the hazard. Fix any exposed wires. Install railings on the stairs. Remove or lock up any items that may pose a danger to your guests.

Child-proofing

Make sure your Airbnb is safe for children, or warn guests of potential hazards.

Climate

Your home should be properly ventilated and the temperature controls should be clearly marked and functional. Make sure guests understand how to safely use heaters.

Neighborhood Friendly Approach

Building Rules

Your guests should be aware of the common area rules in your building. Perhaps you should even notify your neighbors that you will have guests, and ask guests not to bother your neighbors.

Smoking

If you don't allow smoking, we suggest posting signs to remind guests. If you do allow smoking, ensure you have ashtrays available in designated areas.

Parking

Ensure you relay parking rules for your building and neighborhood to your guests.

Noise

Remind guests about keeping the noise down. You may want to consider whether you allow babies, pets, or parties. Develop a policy about guests inviting other people over, and ensure your guests are clear about your "party policy."

Pets

If you allow pets, ensure guests are educated about things like local parks and local customs (e.g., cleaning up after your dog). Have a backup plan in case a guest's pet upsets the neighbors (such as the number of a nearby pet hotel).

House Rules

To avoid surprises or bad guest behavior, you may want to include the information covered above in your house rules in your Airbnb listing profile.

Permissions

Who should you inform prior to listing an Airbnb property?

Contracts

Check your HOA or Co-Op Board regulations to make sure there is no prohibition against subletting or any other restriction against hosting. Read your lease agreement and check with your landlord if applicable. You may consider adding a rider to your contract that addresses the concerns of these parties and outlines the responsibilities and liabilities of all parties.

Roommates

If you have roommates, consider a roommate agreement in writing which outlines things like how often you plan to host, how you'll ensure guests follow House Rules, and even whether you'll share revenue if that makes sense for you.

Neighbors

Consider whether you should notify your neighbors about your plans to host, along with your plan for how to make sure your guests are not disruptive. Subsidized housing

If you live in public or subsidized housing there may be special rules that apply to you. The manager of the property may be able to answer questions about this.

Permits or registrations

Ensure you look up any permitting, zoning, safety, and health regulations that may apply. The governing authorities that regulate the use and development of property in your area may have useful information on such regulations.

Rent Control/Rent Stabilization

If you live in rent-controlled or stabilized housing, there may be special rules that apply to you. Contact your local Rent board to ask questions about this topic.

Before we bid Haere rā, How can Hostaway help?

Setting up an Airbnb investment in New Zealand would be an ideal opportunity for hosts or property managers seeking to scale their business and venture out into a new country. It is also an opportune time for an entrepreneurial Kiwi to venture out into becoming a host on the Airbnb platform.

At Hostaway we offer the most comprehensive and easy-to-use property management system for vacation rentals. As one of Airbnb's preferred partners in 2021, we can help you with a multitude of tasks including managing inquiries, recurring guests, distribution channels, owners, and staff in one place. Our Customer Success team ensures you are trained on all the features and can configure the platform according to your needs. Request a demo call with one of our product experts at your convenience to receive actionable advice and learn how Hostaway can help you grow your property management business.