A Rotorua woman is warning residents who take advantage of the city's booming tourism market by renting out their homes on sites like AirBnb that they may be in for bigger rates bills.

Cyndi Signall, like many others in the city, rents out her five-bedroom holiday home in Tihiotonga on Bookabach.

But she is unknowingly breaching Rotorua Lakes Council rules which state you must pay higher business rates instead of residential rates if renting your home to paying guests in excess of 100 days a year.

The council ruled recently it would be more proactive in monitoring and enforcing the rules.

Advertisement

Ms Signall's home is booked for most of the year.

She was recently sent a letter from the council saying she needed to switch to business rates.

She will now pay an annual rates bill of $10,000 - an extra $5800 - for her Eagle Retreat Lodge.

The council relies on self-regulation when enforcing the different rate, or on members of the public to notify them, meaning someone likely dobbed Ms Signall in.

"I'm really angry about it," Ms Signall said.

"There is no point not renting out the property for under 100 days as it wouldn't be financially viable to do so.

"My guests bring in thousands of dollars into the community."

She said she could rent the home to students for $250 a week each and wouldn't have to pay the higher rates.

Ms Signall doesn't believe it is fair when other short-term providers haven't been charged the same.

But the council's chief financial officer Thomas Colle said: "It's a difficult thing to regulate."

There were more than 700 holiday homes advertised on Bookabach and Air BnB - but there would be duplication between the sites, he said.

It wasn't possible to estimate the potential loss of rates to the council from providers being on the wrong rate, without knowing the exact number of short-term rentals and being able to check whether they exceeded the 100-day threshold.

He said business rates would be double the cost of residential because of targeted business rates such as the economic development rate.

Earlier this year, the community was asked for feedback on the issue of short-term rentals and the regulation as part of annual plan consultation.

There were 58 submissions received and the council resolved to retain the existing 100-day policy and "move to more proactive monitoring and enforcement".

Another woman spoken to by the Rotorua Daily Post, who rents her Fairy Springs home out on AirBnb for more than 100 days a year, is only paying residential rates.

She said she was unaware of the rule.

"It's not fair we are penalised for providing a service to the city. Being Maori, it's something we have done for more than 200 years."

But Alan Sciascia, Waikato and Bay of Plenty regional manager for Hospitality New Zealand, said people making money off renting homes should be treated the same as other businesses that did so.

"If it is frequent, short-term accomodation for travellers, that's a business."