Airbnb In New Zealand: Is It Legal?

Signing up as a host for Airbnb New Zealand is perfectly legal. In fact, it’s a great source of additional income. However, there are a number of rules and regulations you should be aware of before you start listing any properties on Airbnb. 

In this article, we’ll look at how the regulations affect Airbnb owners. 

We’ll also cover the following:

• How an Airbnb actually works
• Whether licensing or subleasing will impact your ability to have an Airbnb 
• Taxes, insurance and safety obligations 
• Airbnb management agreements 

How Does Airbnb Work?

Airbnb is a short term rental accommodation. Instead of paying for a hotel, Airbnb guests can pay a nightly rate to rent a house, apartment, studio or cabin. 

An individual who participates in Airbnb by adding their property to the listing range is known as a host. It is up to a host to decide the rate they will charge for their listing. 

Airbnb acts as a third party, where they handle the bookings and transactions through their website. There are no monthly or membership fees. Once guests have stayed, the hosts will receive their payment from Airbnb (as opposed to the guests directly) after an amount has been deducted for using Airbnb’s services. 

What Regulations Will Impact My Airbnb?

Airbnbs are classified as short term rentals. So, as an Airbnb owner, you won’t be covered by the Residential Tenancies Act.

In other words, you’ll need to have a Short Term Rental Agreement.

Generally, your Short Term Rental Agreement should cover the following key matters:

• How payment will work
• How many guests are permitted
• Smoking rules
• Liability

What Is Licensing?

A property licence gives the licensee the ability to use premises for a particular purpose. 

A licensing contract is different to a leasing contract as it does not allow exclusive use of that property. Therefore, if you have a Licence Agreement, it’s important to ensure your contract enables you to host an Airbnb. 

The details of your licensing agreement depend largely on the individual contract, so it’s worth getting a lawyer to review your contract to ensure you’re compliant with its terms as an Airbnb host. 

What Is Subleasing?

Subleasing occurs when a tenant is currently paying rent for property, and they then choose to let a third party use the premises under a sublease. This means the third party would pay rent to the tenant. 

Subleasing can only happen with the permission of the landlord. So, if you’re thinking of putting up a place you are renting as an Airbnb, make sure your landlord has explicitly consented to this. This is where you’d get a lawyer to review your Lease Agreement to determine whether this is possible under your specific arrangement.  

If a landlord agrees to subleasing for the purpose of an Airbnb, we highly recommend getting this in writing – chat to one of our lawyers for a Commercial Sublease Agreement. 

Do I Need To Pay Tax For Airbnb In New Zealand?

As Airbnbs are classified as short term rentals, the profits earned from hosting is considered to be tax deductible income. Therefore, you will most likely pay taxes from any money made from Airbnb. 

Other taxes and tax deductions can also be applicable, depending on circumstances such as whether you own the property, if it is a main residence or registered as a business residence and other matters. 

Therefore, it’s paramount to keep records of all income and transactions related to Airbnb, as it will be useful for taxation purposes. 

Example Claire owns a small cabin in a regional part of New Zealand. As she does not live there and purchased it as an investment property, she decides to put it up on Airbnb for short term rentals.  Claire pays income tax on the money earned from the cabin, however, she’s also entitled to landlord tax deductions for property maintenance and also pays GST, as the property is listed for business use.

For more information about tax rules, Inland Revenue has provided a short-stay accommodation overview. This can make it easier for you to navigate the rules that apply to your Airbnb.

What About Insurance?

Making one of your spaces available for others to rent and stay in means that things can go wrong, so it’s important to make sure you’re covered by insurance. 

As an Airbnb host, you may wish to look into getting your property insured in case someone is injured on the property and you are  held liable. 

Insurance is also good to cover instances where damage has been done to the property. The general risk with letting strangers into your premises is that you never know if someone may end up damaging the property. 

It’s crucial to let the insurer you have chosen know  the property in question will be used for Airbnb as this will likely impact the coverage you are offered. 

Safety Obligations

If people are going to be staying at one of your properties, then it’s important to make sure reasonable steps have been taken to create a safe environment. This includes ensuring there are no hazards such as shattered glass, a leaking roof, mould or faulty appliances. 

Additionally, you are required to provide a property that meets safety standards such as having a fire alarm (this is a legal obligation for all properties), extinguisher and instructions on how to operate or care for certain things. 

Again, you might find yourself liable if someone gets injured while staying at your Airbnb so making sure you’ve done everything you can is a proactive way to prevent unhappy guests. 

What Is An Airbnb Management Agreement?

An Airbnb Management Agreement is a legally binding agreement detailing the scope of work, liabilities and duties of a Airbnb property manager. Property managers usually oversee the general operations and customer needs, ensuring everything runs smoothly. 

As a result, it’s often useful to have a contract that outlines the services of a property manager to cater to all expectations from both sides. 

Key Takeaways

Airbnbs can be a great way to earn extra income. However, it’s important to work within the confines of the law. To summarise what we have discussed: 

• Airbnbs are short term rental accommodations 
• If you are not the owner of the Airbnb property and have a rental or licensing agreement, it’s important to have permission prior to using it an an Airbnb 
• Keep records for tax purposes
• Let insurers know the property will be used as an Airbnb 
• Make sure all safety obligations have been met
• If you are a property manager or hiring one, consider getting a Airbnb Management Agreement 

If you would like a consultation on your obligations as an Airbnb owner, you can reach us at 0800 002 184 or [email protected] for a free, no-obligations chat.

---