Holiday rental regulations get tricky

Operating an Airbnb used to be as simple as buying fancy bedsheets and watching the bookings roll in. Not anymore.
New Zealand’s holiday rental market has gone full grown-up in the past two years, complete with regulatory frameworks that are making tax consultants flinch (and profit?).

To be sure, money’s still to be made: for example, Queenstown hosts are banking an average annual revenue of $69,000 with 79% occupancy rates. But you and your accountant will need to get down in the weeds of holiday rental regulation to make a proper go of it.

Regulations vary by region
• Auckland Council has gone full helicopter parent with its regulatory approach. Want to run a short-term rental? Complete the accommodation declaration form, potentially get resource consent, and prepare for the Accommodation Provider Targeted Rate—which can bump up your rates.
• Queenstown: A 2023 Environment Court decision allows short-term providers to rent for up to 90 nights per year through a “streamlined” process. You’ll still need local property management, neighbour notifications, and face a 25% rates increase. At least it’s not full resource consent anymore.
• Wellington and Christchurch: Wellington’s playing it cool with a case-by-case approach—who knows how that will play out. Christchurch allows 60 nights annually in residential zones without resource consent—just stick to eight guests max and file your paperwork like a good citizen.

GST grab
April 2024 ushered in universal GST collection. Now, every booking through platforms like Airbnb attracts 15% GST, regardless of whether you’re a weekend warrior or a hospitality empire.

Platform providers collect the GST from guests and handle the IRD paperwork. As the listing intermediary, they must administer the flat-rate credit scheme for accommodation owners who are not GST-registered. This includes passing on a flat-rate credit of 8.5% of the value of the supply to non-GST-registered hosts. GST-registered hosts get zero-rated income but can still claim expenses.

Who’s making the money*
Queenstown is crushing it – $69,000 average annual revenue; 79% occupancy rate; $252 daily rates. Some properties get booked 288 nights per year—practically a hotel operation.
Auckland’s returns are more modest, averaging $24,904 annually with 72% occupancy and $92 daily rates. Pays the bills?
Then there are hidden gems—regional markets such as Hastings, where properties can earn 80% more through Airbnb than traditional rentals. Nelson’s doing $180 daily rates with 63% occupancy.

Tourists are back, but the competition is fiercer. The market’s contracted 20% since pre-COVID, but remaining properties average $679 weekly with 48% occupancy nationwide.
*Figures published on Hospitable.com

Cost of compliance
Mounting costs should make would-be providers do their sums before leaping into the market.
There are council costs, including registration fees (ongoing), rates increases of up to 25%, and resource consent fees (which can run into the thousands).

Some councils also demand local property management, neighbour notifications, and annual reporting. You’ll need to beef up your insurance, too.
Bigger operators need to be GST-registered, which means more record-keeping, and you’ll also need the help of your accountant for mixed-use calculations.

Where to place your bets

1. Location, location, regulation: Tourism-dependent regions with limited accommodation supply = profit potential. Urban markets offer steady demand—though mind the regulatory headaches and thinner margins.

2. Plan for changes: Councils are watching this space. Expect tighter regulations, more consent requirements, and additional targeted rates. The regulatory ratchet only turns one way.

3. Budget like a pessimist: Factor in compliance costs, professional management, higher insurance premiums, and tax obligations. If your margins only work with zero compliance costs, you’re already losing.

4. Change lanes: If regulations kill short-term viability, can you convert to long-term rentals? Lower yield, sure, but downside protection when councils inevitably tighten the screws.

Otherwise, fine.
Tourism revenue is expected to grow over the next five years as visitor numbers recover—which is great news for demand. On the flipside, the regulatory environment will keep tightening.

The math still works in the right locations with proper planning. Queenstown’s proving that with $69K annual revenues. But the days of throwing a property on Airbnb and hoping for the best—gone.

The winners: Investors who understand local regulations, maintain compliance, and pick markets where tourism demand justifies the complexity.
The losers: Anyone still thinking this is 2019 and you can wing it with good Wi-Fi and fluffy towels.

In a market this regulated, ignorance isn’t bliss—it’s expensive. Stay compliant, stay profitable, and read the council rules.

Call 0800 GOODWINS for our take on short and long-term rentals.