Nearly 800 property owners in the Queenstown Lakes district will be sent a reminder to register their short-term holiday rental room or house as visitor accommodation.
The move follows an audit by the Queenstown Lakes District Council (QLDC) of websites advertising properties for short-term rent.
Property owners have had since 2014 to register their properties but many have not done so.
Properties that are reclassified as visitor accommodation could face a 25 per cent increase in their rates from July 1 this year.
QLDC chief financial officer Stuart Burns said there were good reasons short-term holiday properties needed to be registered including the health and safety of the visitors who stay in them. It was not just a revenue-gathering exercise, he said.
"There are certain things that need to be provided, such as smoke alarms, decent heating and car parking, and it's not always the case.''
There was also a clear equity issue.
"We have 800 people who have registered their property as visitor accommodation and are following the rules, and so why shouldn't the others?''
It had, however, been a time-consuming and expensive exercise to find the 792 property owners who will now get a letter from the council.
It was likely there were more properties not registered but the council did not have the resources to continue checking for them day after day.
"I wouldn't say we've stopped looking; I'd say it's something we exercise on a point-in-time basis.''
He said identifying properties used for short stays was made more difficult by the fact that the housing market "was very fluid'' so owners changed.
Hospitality New Zealand national board member and general manager of Gate and Harvest Hotel in Cromwell Glen Christiansen said he fully supported the direction the QLDC was taking and would like to see other councils in New Zealand do the same.
"What we ask for is an even playing field. Online booking websites like Airbnb are not a big concern. What is a big concern is that they're not paying the appropriate rates and fees or supplying the appropriate services.''
Mr Burns said property owners who failed to respond to the letter from the QLDC would be contacted and asked to explain.
"There are enforcement provisions that we can take but we'd prefer to have people understand the rules and comply voluntarily. Our first step is to make sure people understand their obligations."
The "enforcement provisions'' ranged from requiring the visitor accommodation use to cease to charging the property owner with failing to comply with district plan rules, which could result in a fine of up to $300,000 and two years' imprisonment.
Mr Burns said he did not think any property owners would withdraw their homes following the QLDC action, but if they re-listed them as long-term rentals it would help ease the housing shortage in Queenstown and Wanaka.
A QLDC planning and development department spokesman said the QLDC district plan was being reviewed in two stages and the "issues'' surrounding visitor accommodation were in the second stage of the review, which would happen either late this year or early 2018.
Last month it was revealed that Queenstown was the country's most inquired-about holiday destination in 2016, despite also having the highest prices.
According to analysis of Trade Me's Holiday Houses website, Queenstown received 51 per cent more hits than second-placed Mt Maunganui. Queenstown's average nightly rate of $624 was nearly twice the national average.