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  1. #11
    Join Date
    Apr 2004
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    Auckland
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    1,896

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    Surely ALL rental properties should be paying these extra taxes.
    After all - think of the glorious things our great leaders will do with the stolen dosh.
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  2. #12
    Join Date
    Nov 2007
    Location
    north shore
    Posts
    375

    Default

    Yes I wondered if rentals will be next

  3. #13
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    5,084

    Default

    Shhhhhhhhhhhh!
    DFTBA

  4. #14

    Default

    They dont apply if you just rent a room.

    The rates you quote are calculated on more than 180 days per year???

    If you ae under 28 then no problem and gradualted after that under 135 days 25% APTR 189 days 50%

  5. #15
    Join Date
    Nov 2006
    Location
    Cyberspace
    Posts
    5,737

    Default

    Internet suppliers?

    Tell me, if you can, that a business uses more band width than a hard core gamer. And yet, businesses pay more for their internet.

  6. #16
    Join Date
    Jun 2013
    Posts
    2,091

    Default

    Quote Originally Posted by Keys View Post
    Internet suppliers?

    Tell me, if you can, that a business uses more band width than a hard core gamer. And yet, businesses pay more for their internet.
    Online gaming is not a particularly high usage for bandwidth.

    Businesses pay more for one simple reason, because they can, and ISP's know it.

  7. #17
    Join Date
    Jun 2004
    Posts
    10,313

    Default

    Quote Originally Posted by elguapo View Post
    Businesses pay more for one simple reason, because they can, and ISP's know it.
    And they can claim back GST and 28% of the cost.

  8. #18
    Join Date
    Mar 2013
    Location
    Auckland
    Posts
    1,663

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    The rates models recently implemented by Auckland Council mean Airbnb hosts will end up significantly subsidising hotel and motel operators who will make bigger profits at the cost of many Airbnbs going out of business.

    Density and Occupancy
    Commercial rates are to get business owners to pay for the higher level of council-provided services that they use. Hotels/motels have a much higher density of people (staff & guests) per m2 than an average suburban home. This puts a much greater load on infrastructure than a residential dwelling, in terms of water consumption, rubbish generation and even transport/roads. It would be highly unfair for STR providers to pay for density they just don’t have. My property, for example, is on an 1800m2+ section. If I rent it short-term to a family when I am not there, how is it remotely justifiable to charge me for the density of a multi-storey hotel accommodating hundreds?
    Hotel/motels/backpackers are occupied year-round by staff and visitors. There will be multiple people onsite, using infrastructure, 24hrs, 365 days per year. STR, however, are characterised by vacant periods. Therefore, they use less services not only than commercial accommodation on a similar-sized section, but also than long-term tenants would. They consume less council services than an average household would. Yet backpackers’ accommodation, with its super-high density dorm rooms and multiple, shared ablutions areas and commercial-sized kitchens, are exempt. There is no logic or fairness in exempting such a heavy, highly commercial, inner-city user of council services while penalising a suburban house.
    The Council is claiming that targeted rates are required to fund council-sponsored public events that extra visitors attend. Well, as a residential owner-occupier, my rates ‘cover’ my household’s attendance at such an event. As a residential landlord, my rates ‘cover’ my tenant’s household to attend that event. Surely then, a short-term rental’s landlord’s rates also cover the attendance of the temporary household in occupance at the time? Unlike a hotel/motel, that can have multiple ‘households’ at a time attend an event, a STR can only house one at a time.
    The nature of short-term residents
    Airbnb-type accommodation, while accommodating some tourists, tends to attract people for whom a traditional hotel/motel would be unsuitable. Some are even locals. It is common for families who are having a home built, major renovations undertaken, or who have just moved into the area to rent a fully-furnished property short term. This means that they are able to continue their normal lifestyle over a period of weeks or months, which would not be possible in a cramped motel room. Clearly to charge a targeted rate to people providing these families with a temporary home is unfair and not what it was intended for. Other longer-term stayers include people in Auckland on temporary work contracts or tertiary students attending a local provider for a semester. In these cases, traditional long-term unfurnished rentals are not practical or probably even possible (paying bonds, getting utilities put on etc.), hotels are unaffordable and Airbnbs therefore fill a gap in the market. Short-term stayers include people coming for family events – weddings, graduations, christenings, reunions etc.
    None of the above are linked to ATEED spending or activities in any way. The one that may possibly be, is that of short-medium term primary/secondary international students and their caregivers. Yet with education becoming a significant source of international income, having good quality, convenient and affordable accommodation is crucial.
    The nature of self-contained vs. separate spaces
    Many properties, while listed as ‘whole places’ on Airbnb, are actually guest suites/sleepouts/granny flats within/next to/under the owners’ homes. These areas are not legally allowed to be let out as long-term tenancies, by either the Auckland Council, or the MBIE. There are also legal reasons not to rent these spaces out to flatmates, as recent Tenancy Tribunal decisions have held these to be ‘illegal tenancies’ rather than flatmate arrangements and have ordered the return of all rent monies paid. Putting such spaces on Airbnb is a safer way to get help with the mortgage while avoiding potential legal issues and also be able to get their home to themselves sometimes. Homeowners with such properties are now faced with an impossible situation: they can’t legally rent them long term and it is now uneconomical to rent them short term.
    Given that the council has excluded rooms in owner–occupied houses (ironically, as these are the closest competition to hotel rooms, both in style of accommodation and nature of guests) this puts an unfair burden on those whose spare rooms happen to have an exterior door.
    Official requests to the council for a definition of a self-contained or separate space have received the vague response that they must contain a bathroom and a ‘food preparation area.’ What does that consist of? The vast range of ‘separate spaces’ goes hand-in-hand with a variety of approaches to providing meals, drinks or snacks in such places. So what counts? A sideboard with a toaster and jug? A microwave on a shelf? A fridge and cereal bowls? A rumpus room-style bar with a sink but no hob or oven? Clearly these arrangements in a sleepout or rumpus room are a far different prospect to a minor dwelling, which it seems that the council must have been assuming, when they instituted this ill-thought out policy. The council even recently used this exercise to classify one host’s house as two rating units, despite it being illegal to rent out this ‘second dwelling’ under more than one piece of legislation.

    How can the council claim that an area is not self-contained for tenancy purposes but is self-contained for business rates and APTR purposes? This strongly smacks of loading the dice in their favour and they may find their increased rates grab isn’t worth the costs to investigate and administer it as they face sending a valuer to each property in order to verify the space’s separateness and dimensions.
    Some hosts of minor dwellings on their own property, which may qualify as a separate dwelling, like the flexibility of being able to timetable vacancies for family visits, maintenance or just a bit of alone time. Airbnb gives them this flexibility of when they have people in their backyard, yet these rates threaten to remove that right.
    Yes, some Airbnbs are properties that could otherwise be part of the rental pool. But given the current, very hostile environment landlords face, you can hardly blame them.
    The Osaki case gives tenants carte blanche to do all sorts of damage to a rental, claim it as accidental and walk away scot-free, leaving the landlord out of pocket, up to the tune of tens of thousands. The P debacle has seen many Ma and Pa retirement investors lose the shirt off their backs.
    With depreciation on buildings shut down, the ability to claim losses against income making it harder and harder to save for retirement through rentals, rules coming in making it compulsory to spend thousands on insulation and heatpumps they just can’t afford and other changes signalled, like losing the ability to give notice to troublesome tenants or to sell a house, is it any wonder that some have turned to the safer route of short-term rentals? Imposing targeted and business rates treats the symptom, not the disease.
    Many properties are actually family baches rented out when the owners aren't using them, to help defray costs. This is a practice that has gone on for generations and many Kiwi families love the opportunity for a reasonably-priced family holiday, staying at someone's bach by the sea, lake or forest.
    Charging these owners commercial rates threatens that iconic part of growing up Kiwi, as it would not then be economically viable to rent it to other people.
    The basis of the calculations
    The council justifies these enormous rates hikes on the basis of a cherry-picked figure of $213 that they claim is the average cost per night that the homeowners are pocketing. However this figure is far removed from what the majority of hosts charge. Hosts renting out sleepouts and granny flats typically charge under $100 per night. New Zealand property owners renting their homes on Airbnb pocketed a median additional income of $4400 a year, according to a recent report prepared by Deloitte for Airbnb. Yet some people now face combined rates rises (commercial + APTR) of up to $15 000 per annum that they are suddenly expected to find.
    In addition, Airbnb providers do not have the luxury of economy of scale that commercial providers have, meaning that their overheads (mortgage, commercial insurance, cleaners, gardeners, furnishings, power supply, consumables, entertainment, maintenance) make up a larger percentage of the gross income.
    The council has also admitted that their inability to identify the majority of the liable homeowners means that the ones they have been able to identify will have an increased portion of the APTR ‘budget’ allocated to them.
    The inequity in regards to home-based businesses
    Thousands of Kiwis run other businesses from their homes, such as a start-up in the garage, small-scale manufacturing, an online business from a home office, a distributorship from the rumpus room, hair and beauty services, a tradie with all his tools and materials etc.
    Many of these are likely to cause more of a burden on infrastructure than your typical Airbnb, as some also have employees coming and going. Some will be turning over hundreds of thousands of dollars per annum, claiming a portion of their rates, mortgage interest, insurance, water, communications and electricity against their income tax and yet paying residential rates.
    Airbnb is, when it comes down to it, a residential activity (people sleeping, cooking dinner, watching TV, relaxing on the deck, checking their emails, reading, playing in the backyard) in a residential property, unlike many other businesses being run from people’s homes. So while full-time, day-job businesses don’t pay a penny in commercial rates, people running part-time, pocket money ventures are being singled out for thousands of dollars.
    The retrospective aspect
    Consider the following scenarios: 1) A young family who rented out their own home for 30 days over the school holidays to fund their own time away and who now face commercial rates equal to that if they had rented out an investment property for 135 days; 2) An older lady, asset-rich and cash poor, who has a sleepout behind her home of 30 years. Well past the bother of having full-time flatmates, she has rented it occasionally to carefully selected short-term residents, in order to supplement her superannuation. Only she now faces rates rises of $12 000, in excess of what she earned from it. In both scenarios, they would have done things differently, had the information about changes to rates been available in advance. They are now unable to change things and even if they cease their activity for the 2018-2019 rating year, they will still be liable to pay business rates and APTR for non-existent business activity, leaving them worse off than if they had not rented out their spaces.
    Even worse, if they attempt to sell a property that they had used as an Airbnb, the increased rates will pass on to the new owners. That will lead to one of two scenarios: having to discount, significantly, the asking price for such properties and difficulty selling them, or the new owners facing an unfair burden.

    Biting the hand that feeds
    Recent research also shows that Airbnb properties ‘share the love’. Other businesses, located in non-touristy areas, get custom from people staying in nearby Airbnbs.
    If these Airbnbs didn’t exist, these tourist dollars would stay with the same few businesses located in central business districts or tourist attractions. A recent report found that Airbnb travellers contributed $660 million to the wider economy.
    Unlike most boarder/flatmate income, Airbnb income is taxed from the first dollar, so the economy makes more from these arrangements. Many do it to help with mortgage payments, pay for renovations or fund their own holiday.
    As hosts, we already pay income tax on the money we make, so we are doing our bit for the country's coffers. Standalone properties also pay for commercial insurance and most of us employ locals, either directly as cleaners, gardeners and maintenance trades or indirectly through the services we buy for our Airbnb ventures.
    For many hosts, paying commercial rates will see their Airbnb become unprofitable given the already tight margins in this economy, and they face being forced to deactivate their listing. When that happens, the IRD - and therefore the nation’s taxpayers, local businesses and tourism operators will all miss out.
    My blog. From personal experience.
    http://statehousinginnz.wordpress.com/

  9. #19

    Default

    Sidinz

    a very well crafted contribution well done.

    can I focus on one part?
    The nature of self-contained vs. separate spaces
    Many properties, while listed as ‘whole places’ on Airbnb, are actually guest suites/sleepouts/granny flats within/next to/under the owners’ homes. These areas are not legally allowed to be let out as long-term tenancies, by either the Auckland Council, or the MBIE. There are also legal reasons not to rent these spaces out to flatmates, as recent Tenancy Tribunal decisions have held these to be ‘illegal tenancies’ rather than flatmate arrangements and have ordered the return of all rent monies paid. Putting such spaces on Airbnb is a safer way to get help with the mortgage while avoiding potential legal issues and also be able to get their home to themselves sometimes. Homeowners with such properties are now faced with an impossible situation: they can’t legally rent them long term and it is now uneconomical to rent them short term.
    Given that the council has excluded rooms in owner–occupied houses (ironically, as these are the closest competition to hotel rooms, both in style of accommodation and nature of guests) this puts an unfair burden on those whose spare rooms happen to have an exterior door.
    Official requests to the council for a definition of a self-contained or separate space have received the vague response that they must contain a bathroom and a ‘food preparation area.’ What does that consist of? The vast range of ‘separate spaces’ goes hand-in-hand with a variety of approaches to providing meals, drinks or snacks in such places. So what counts? A sideboard with a toaster and jug? A microwave on a shelf? A fridge and cereal bowls? A rumpus room-style bar with a sink but no hob or oven? Clearly these arrangements in a sleepout or rumpus room are a far different prospect to a minor dwelling, which it seems that the council must have been assuming, when they instituted this ill-thought out policy. The council even recently used this exercise to classify one host’s house as two rating units, despite it being illegal to rent out this ‘second dwelling’ under more than one piece of legislation.
    you are right to say that council cannot provide a definition because there isnt one? They use the minimum requirements for a residential dwelling to mean that when these facilities are duplicated another dwelling is formed.

    There is no legal obligations that apply to rentals that doesnt also apply to houses (disclosure statements and mandatory smoke alarms aside), There is an argument that separate tenancys need approval because the building act requires fire separation for 'separateness' but this should have been understood to be ownership separation (and forming boundaries) and "other property" created.

    the tenancy ruling were premised (and now overturned) on the assumption that unapproved meant unlawful and this is simply untrue. Under the building act unapproved simply means unconsented which may still be lawful but maintaining unconsented work (even if it needed consent) is not unlawful as it is not against the building act as long as the building is not dangerous or insanitary. The RMA can make you remove the adverse effect though.

    This lack of legal justification means these issues are being enforced without a clear connection to the law and confusion reigns.

    There is nothing to stop an owner renting out a space in their house and if it happens to be self contained then all the better for the tenant.

    This Ar B nB is a crock policy. It doesnt apply to room rentals (stated in the council policy statement). why cannot an owner say; I will rent you this room and you can use the facilities (which happens to be nit used by me while you are there?)?

    your point about home occupations is fair but offices are not being hit with ATEED bed taxes but watch this space as the bureaucrats are as likely to start charging for the 20% as commercial rates if they get wind of this and get away with this bed tax.
    Last edited by John the builder; 10-08-2018 at 09:32 AM.

  10. #20
    Join Date
    Mar 2013
    Location
    Auckland
    Posts
    1,663

    Default

    In the case I mentioned, the homeowner had a partial lower floor, like many in Auckland. It contained either (not sure which) a bedroom/en suite or rumpus/en suite and his laundry.
    He put a fridge and microwave in the laundry for the guests' convenience. On the basis of that, he was told it was self contained, stung with business rates, the APTR rate AND had his house reclassified as two rating units/dwellings, forever. Mind boggling.

    One of the scenarios I wrote about has a real-life counterpart. An older woman with her Remuera home of 40 years. Had people stay in her sleepout for a few months and when they left she put it on a STR website. When the council sent out their fishing letters, she answered and her rates have gone up to $25K - significantly more than her whole pension! This is what happens when people try to help themselves and supplement their income when they have high housing costs and low incomes.
    My blog. From personal experience.
    http://statehousinginnz.wordpress.com/


 

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