Rotorua businesses take up housing stock among housing crisis

Businesses using residential properties isn't the biggest contributor to Rotorua's housing crisis, council says. Photo / File

Short-term rentals and a lack of new builds have been well documented as contributing factors to Rotorua's chronic housing shortage in recent years. However, is there something else eating into our housing stock? Despite cries the CBD is dying, businesses are setting up and operating out of residential homes outside the main city centre. Stephanie Arthur-Worsop finds out how many and why.

Nearly 200 residential houses are being used for commercial purposes, despite Rotorua's CBD being plagued with empty shops and the city experiencing chronic homelessness.

In response to questions from the Rotorua Daily Post, Rotorua Lakes Council confirmed it knew of about 180 houses being used to run businesses out of.

This excluded homes that people lived in and operated a business from.

The council was not able to provide a comparison with previous years because this was not data it held.

It was also not able to say which businesses were operating from these addresses because the council's records related to property owners, not businesses.

All commercial activities and businesses the council is aware of are charged commercial rates regardless of the building they operate out of.

Tiny Deane, who runs the city's homeless shelter, said the situation was frustrating because Rotorua needed those homes for its residents.

"If all those businesses moved into the CBD today and we were able to put an extra 180 homes into the rental pool, that would be a huge injection. We have empty shops there, it's not like there's nowhere for the businesses to go."

Empty shops in the CBD. Photo / File

But Deane said it wasn't just businesses operating out of houses that impacted the housing crisis.

"There are 1000 Airbnbs in Rotorua. We need about 800 extra homes for our people. Give us those homes and that would even things out."

First National principal and Rotorua Real Estate Institute of New Zealand spokeswoman Ann Crossley was "amazed" the number of businesses in residential homes was so high.

"If it had no impact then it wouldn't be an issue but it does and it's part of the problem that's creating increasing pressure on our housing stock."

Crossley said if the council was critically looking at ways to rectify Rotorua's housing shortage, it should have more of an appetite to solve a problem adding to the situation.

"Drop those 180 businesses back into commercial premises and that would allow for 180 families to have a chance at getting a home.

"If the council knows about 180 businesses, you can bet there would be another 180 businesses they don't know about. This shouldn't have been allowed to happen."

But the council believes the impact of businesses operating from houses is minor in comparison to issues like an increasing population and new builds not keeping up with demand.

Operations group manager Henry Weston said businesses had operated out of residential houses in Rotorua for many years with no significant impact on the housing market.

"The housing shortage is a relatively new issue, resulting from a number of contributing factors, many of which council is looking to address.

"Work has started on the development of a district housing plan with a series of workshops and drop-in sessions facilitated by council. An update on this work is expected to be reported to elected members later this year."

Weston said exploring the potential of rates relief was a way to incentivise inner-city development, building improvements and conversion to inner-city living.

However, this work is yet to begin.

"Development of options will include working with stakeholders and consulting the public, to develop a local policy that could support development and investment decisions."

In response to questions about how businesses were able to set up in a residential address, Weston said the conversion required resource consent under the current District Plan.

"The plan discourages businesses establishing in residential zones as a means to encourage business growth in the CBD so it is more difficult now to convert a residence into business premises.

"However, if a premises has existing use rights as a business, they may continue to operate as a business even if the original business moves on or the property is sold."

Nita's Beauty owner Nita McLachlan moved from a property on Jervis St to one on Old Taupo Rd in February this year.

She has owned her business for more than two decades and said no incentive would be enough to get her to move into the CBD.

"I like where we are because it has a more homely feel, it suits my personality and my business. I've never wanted to be in the CBD.

"It was cheaper for me to buy this property and pay the mortgage than it would be to rent a space in the CBD."

Own It insurance and mortgages director Lorna Harris said the company bought a villa in Mt Eden and transported it to the Old Taupo Rd site where the business had operated for the past 10 years.

Harris said the decision not to set up in the CBD was to give the business a more "homely" feel, garner more exposure from the traffic and make parking easier for customers.

"We wanted it to look inviting, we didn't want to be crammed into an office space where people had to pay for parking then walk a kilometre to find us."

Harris said it was unlikely any council incentives could make her move into the CBD but said there were fewer areas zoned to allow for commercial use which would "help push more businesses back into the CBD".

It cannot be confirmed whether these businesses are part of the 180 identified in the council's records.

Rotorua mayor Steve Chadwick said many factors were contributing to Rotorua's current housing shortage.

"Until a few years ago we didn't have population growth, things like short-term rentals didn't have as big an impact on housing supply as they do now, and there wasn't the same level of demand for new development.

"Population growth has put the pressure on housing, and development hasn't happened as quickly as any of us would like.

"All this highlights the need for a district housing plan and that work is under way. We need more housing of all types and it will require a collective response, working collaboratively with others, including Government and its agencies, to provide the solutions our community needs."