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Airbnb and Bookabach owners may face extra selling costs

Airbnb and Bookabach owners may face extra selling costs

Thousands of Aucklanders using Airbnb and Bookabach could be forced to sell their homes at a discounted price because of new rates charges, property industry figures say.

The warning comes as Auckland Council seeks home owners leasing their properties online as short-stays to impose commercial rates and a bed tax, totalling up to $25,000 in some cases.

Enormous rate rises

Reeling from the enormous rate rises, some home owners had been telling Auckland Chamber of Commerce chief executive Michael Barnett they risked losing their homes.

This included an 80-year-old woman, whose rates had jumped from $3000 to $25,000, more than she was earning by letting her house on Holidayhouses.co.nz

Barnett said in another case, a Ponsonby couple letting a room to make ends meet faced the prospect of selling their home of 50 years.

Yet such owners ran into further hurdles when selling their homes because their new higher rates bills automatically passed on to buyers – even if that buyer didn’t intend to continue letting out the house for short-term stays.

Buyers inheriting higher charges could only seek to have them removed the following rating year.

This meant sellers would either be forced to “discount significantly the asking price for such properties and [have] difficulty selling them” or leave buyers facing an “unfair [rates] burden”, Airbnb host and property investor Sian Draper said.

Property Institute of NZ Ashley Church agreed, saying, “an investor would absolutely expect a discount on the price relative” to the rates bill.

It’s a scenario that could affect up to 3800 home owners currently in council’s sights.

These owners face a two-part rates increase that includes a commecial rating, recognising the house is being used as a business, and a targeted rate – or bed tax – based on the number of nights the property is let out.

Council identifies “standalone spaces” through websites

Council has identified about 8000 “standalone spaces” being let online through Airbnb, Bookabach, Bachcare, Booking.com and other sites, but only about half had been let for more than 28 nights a year and so were liable for charges.

Of these, the properties that were let out more often faced higher bills, with those reaching 180 visitor nights in the year being hit with full commerical rates.

But while some said they now faced bills up to $25,000, most people would receive lower charges, which in some cases amounted to $3 or $4 a night, council said.

Its manager of financial policy, Andrew Duncan, said anyone who felt their bill was not accurate could contact the council with further information and it would be amended.

He said the targeted rate was being applied to private home owners to even up the playing field after hotels and motels complained when they were the first to be hit by the bed tax.

However, home owners and others in the property industry said council had been too hasty bringing in its policy and did not allow time for the kinks and unintended consequences to be ironed out.

Property Sales – who foots the bill?

One such consequence was property sales and the question of who paid the rates bill.

Daniel Coulson, national residential manager at Bayleys, said real estate agents were watching developments closely.

Commercial rating of homes would either have the effect of limiting the buyer pool or affecting how much buyers were willing to pay, he said.

Should a buyer be looking to carry on letting out a property, then it might not depress the value, he said

But not all buyers were suited to or interested in running run commercial accommodation from home, he said.

Valuer Frank Spencer from Logan Stone said, given two identical properties, a purchaser would pay less for the one that was commercially rated.

The discount in an ideal world would match the size of the rates bill the buyer was inheriting, he said.

The Chamber of Commerce’s Barnett, meanwhile, said council needed to think through its “foolish” new “tax grab” before people were forced to sell up and lose their homes.

Article written by Ben Leahy, NZ Herald, Business, Sunday 2nd September 2018

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