Rotorua's motel sector warned four years ago that the housing crisis would spiral as more rental homes were turned into Airbnb holiday accommodation. Photos /123RF / Andrew Warner
Rotorua’s motel sector warned the Rotorua Lakes Council more than four years ago that the city’s housing crisis would spiral and Fenton St would resemble “squatters’ accommodation” if it didn’t put tighter controls on private holiday rentals.
One Rotorua motelier believes the influx of homeless needing emergency housing motels is directly linked to the rapid growth of private holiday rentals, leaving a massive gap in Rotorua’s rental market.
The council said all options to improve housing availability needed to be looked at, including private holiday rentals, but they were not a “silver bullet”.
And Rotorua’s biggest supplier of holiday rental accommodation, Airbnb, said most of its hosts were just trying to combat rising living costs, and that the company’s efforts to make travelling more affordable could benefit local businesses.
A report presented to the council by the Rotorua Motel Association in March 2018, obtained by the Rotorua Daily Post Weekend, asked for stricter measures on the private rental sector — such as limited guest nights, resource consent requirements and commercial rates.
The association said at the time it wanted a “level playing field” and without it, moteliers would struggle to keep pace resulting in motel maintenanceslipping.
The association unsuccessfully asked the council to introduce rules such as those implemented by Queenstown to address issues created by homes used as short-term visitor accommodation.
At the time of the report, there were just over 470 Airbnbs in Rotorua. Now, according to a website search, there are 986 listings, making it the biggest supplier of holiday rentals.
These include rooms in houses for short-term rent as well as whole properties. Other private holiday rental providers had 329 rentals listed.
The association asked the council in its 2018 presentation what was being done to combat the impact of houses being taken out of the rental stock.
It claimed Airbnb turned over in a month almost the same revenue as all motels on Fenton St.
“This redistribution of tourist spend is taking a toll on established tourism providers. In the long term, this will affect the ability of moteliers to invest in repairs and maintenance and there is a concern that Fenton St, the entrance to our city, will start to resemble squatters accommodation and will be not too dissimilar to the empty run-down buildings in the Rotorua CBD.”
Solutions put to the council included requiring all private accommodation rentals to be registered with a fee towards monitoring, excluding certain areas from running holiday rental accommodation, having a 90-day limit for short-term lets and ensuring anyone wanting to let over 90 days be subject to resource consent, including approval from neighbours.
The report said the whole community needed to take the issue seriously because if nothing was done, the council would need to do a “massive u-turn” in five to 10 years to solve a “massive upcoming problem”.
The 2018 report said concerns had been expressed that residential property owners were running commercial businesses with no compliance or regulation obligations, while paying residential rates.
It said the returns were so lucrative, rentals were being sold to investors and tenants were being given notice to vacate. Moteliers were noticing local families were “knocking on motel doors” looking for long-term accommodation.
The report said that despite a booming region in 2018, Rotorua was experiencing the “worst housing crisis it has ever seen” and there were not enough rentals to house the growing number of people wanting to live and work in Rotorua.
It said people were forced to live in their cars, sheds or stay in overcrowded houses.
The report said if the council introduced a “level playing field” along with guidelines and compliance costs, motels could be busier and there could be an influx of properties re-entering the rental market, helping with the housing shortage while new houses were being built.
In requesting “guidelines, consents and fairness”, the report asked the council to “sit up and take serious notice” of the issues raised.
Rotovegas Motel owner Bryce Smart raised the issue in his written submission last month to independent commissioners deciding whether 13 contracted emergency housing motels should be given resource consent for the next five years.
Smart, whose motel is one of the 13 seeking consent, said moteliers started noticing an increase in Rotorua families asking for long-term rentals from 2016 to 2018.
His submission said the turning of nearly 1000 residential houses into short-term accommodation had caused “industrialised homelessness” and people at the bottom of the housing ladder were being forced to live in motels.
His submission said once the Ministry of Social Development started paying for motel accommodation, many Rotorua “Airbnb refugees” living in cramped conditions in the suburbs took up the option of warmer and safer living conditions in motels.
“Contrary to popular belief, most of the guests that came to stay at my motel were from Rotorua, not from out-of-town.”
A housing capacity assessment presented to the council in February estimated the city was short 1500 homes, and projected the shortfall would grow to 3630 by 2050.
Thomas Colle, council chief financial officer and organisational enablement deputy chief executive, told the Rotorua Daily Post Weekend the council needed to look at all options to improve housing availability and private holiday rentals were only one area, but were not a “silver bullet”.
Colle said the district had always had a large number of holiday homes with a “vast majority” being in the lakes areas.
He said the council had accepted owners could make decisions about whether a house was used for a business or part-business purpose and, in some cases, they might need resource consent and could be charged commercial rates.
“Obvious examples include daycare centres, dental or vet practices. In the same way, [the] council has allowed holiday homes to be rented out as holiday accommodation below a certain number of nights, without being charged additional rates. Only large, fully commercial holiday homes require a resource consent.”
He said previous councils determined this was the best way to strike a balance between “rules and an owner’s choice”. The Queenstown approach was considered, along with other options, but was rejected.
“The new council has not had the chance to consider whether current consenting requirements and rating rules need to change.”
Airbnb New Zealand and Australia manager Susan Wheeldon said Airbnb was focused on “growing the tourism pie” for everyone by making travel more accessible and more affordable.
She said more tourists meant more tourism dollars for local businesses such as pubs, restaurants, cafes and retailers - which in turn helped support local jobs.
“Short-term rentals also provide a way for everyday people to stay afloat and combat rising costs of living and growing mortgage repayments. It’s no surprise that we’re seeing people increasingly rely on hosting to make ends meet in the face of the current economic climate.
“As the cost of living continues to rise, Kiwis are hosting on Airbnb as a way to keep on top of their household budgets, with new research providing insights into how that money is then spent, on top of other motivations for listing their property.”
She said in a recent survey, about 40 per cent of New Zealand hosts said they hosted their homes on Airbnb to earn more money to cover the cost of living. Thirty per cent were motivated by earning money to make ends meet and 48 per cent wanted extra spending money.
“Housing affordability is a really difficult issue not just for people and communities, but also governments looking to genuinely tackle this policy challenge. It’s a complex issue with a range of contributing factors such as population movements, the supply of new homes, the ratio of public housing, interest rates and broader economic conditions.”
She said hosts could make their own homes or secondary homes available that would have otherwise been used exclusively as baches or holiday homes for friends and family.
A large plume above Whakaari/White Island prompted questions.