Bach owners face rental tax

Thames-Coromandel District Council are proposing a new charge aimed at short-term holiday rental accommodation. Photo / Alan Gibson.

Council eyes levy for Coromandel holiday homes being let out after lobbying by moteliers.

About 1400 private bach owners on the Coromandel face being stung with a new council charge if their properties are rented out as short-term holiday accommodation.

The proposal by Thames-Coromandel District Council would come into effect next summer and is believed to be a first for the country.

It follows lobbying by moteliers who are forced to pay commercial rates. They say the current situation, where they compete commercially with private bach owners who market their properties on sites such as Trade Me or Bookabach, is inequitable and unfair.

The council is also planning to levy larger bed and breakfast or homestay operators with a commercial rate. It is estimated the proposed charges would generate more than $250,000 each year to help finance the council's economic development activities, which help to draw thousands of tourists to the region.

But the proposed charge is drawing heat from some bach owners since it was announced this week.

South Auckland manager Mike Rouse, 60, has owned a bach in Whangamata for six years as a family getaway. He questioned the legality of imposing an additional "tax" on holiday home owners and said it would be difficult to implement and police.

Mr Rouse said baches were often loaned to family members, who pay a small "service charge". He feared his property would be caught by the proposed $200 targeted annual rate.

"It's impossible to implement it. We don't think they can legally impose a tax. Next thing they'll be wanting to tell you when you can use your bach and when you can't."

The council signalled plans to review "a perceived inequity" between moteliers and other short-term accommodation providers as part of its 2014-15 Annual Plan process.

"Moteliers pay the commercial portion of the economic development rate and their competitors do not," a council document states. "We have completed our review of the sector and concluded that there is an inequity in the current arrangements."

The council proposed introducing a targeted fixed rate of $200 plus GST for short-term holiday rental properties, and classifying bed and breakfast businesses with four or more bedrooms as commercial rather than residential ratepayers. The changes are estimated to raise $252,000 a year.

The council is also considering making bach owners apply for resource consent if they rent properties to more than six paying guests at a time.

Trade Me, Bookabach and Bachcare are in talks with the council over its proposals.

Motel Association chief executive Michael Baines believed the proposed holiday home charge was a first for New Zealand, and he called for a more consistent national policy. "It's not a level playing field, it's not even a vertical cliff."

People have until April 9 to make submissions.

New charge
• Thames-Coromandel District Council proposes a $200 annual charge for bach owners who rent their properties as short-term holiday accommodation.
• The targeted rate is believed to be a first for New Zealand.
• It aims to address inequity between private holiday home owners and motel operators, who pay commercial rates and hefty compliance fees.
• Larger bed and breakfast or homestay operators would also be treated as commercial ratepayers.
• If approved, the changes would come into effect next summer.