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Holiday rentals generate $100 million for Kiwi regions

Holiday rentals generate $100 million for Kiwi regions

Results of an industry-wide survey on holiday rental homes reveal an industry worth over $100m a year to local economies in the form of rates, maintenance and renovations.

The survey, conducted at the end of last year by Bookabach, Holiday Houses and Bachcare, aimed to create a body of data that could be used to assist local councils make decisions around tourism and visitor accommodation. Bookabach general manager Peter Miles explains, “MANZ (the Motel Association of New Zealand) have been actively lobbying district councils around the country to place restrictions on the holiday rental industry.

We came together as a concerned industry group to do this survey so we could provide councils with the information they need to understand the negative impact of increased regulation of holiday rental.”

Bookabach, Holiday Houses and Bachcare collectively list approximately 90% of the NZ holiday rental market, an estimated 10,000 actively rented properties. “We also wanted to be able to directly address some of the criticisms raised by Councils and MANZ related to health and safety,” says Miles.

The results were finalised just as Thames Coromandel District Council were accepting submissions on their proposed District Plan, which includes revisions that would place greater restrictions on holiday rentals. The group says that the proposed restrictions would make holiday rentals less affordable and they’ve made a joint submission to Council including results of the survey.

The survey attracted over 2,000 responses from holiday rental owners, 85% with free-standing baches and holiday homes (85%). The remaining 15% was made up of apartments, flats/duplexes and townhouses.

The survey data re-enforces the importance of holiday rental income to help support the lifestyle decision of owning a bach. “Nobody makes a killing from renting their holiday house out,” explains Holiday Houses general manager Andrew McKaskell. “What this survey proves is that rental income helps maintain and improve these properties over time. And, it helps owners justify having a second property they hardly use.”

The typical holiday rental is occupied for 25 nights a year by their owners and family members, and rented out an average of 60 nights a year. Owners received between $4,000 and $16,000 a year in rental with an average of $12,513. When asked about how important this income was to them, 73% of respondents agreed (56% strongly) that without holiday rental income they could not afford to keep or maintain a bach. 79% agreed (61% strongly) that without it they could not afford to renovate or improve their properties.

The group point out that the money spent on maintenance, improvements and rates goes back into the local community – and this amounts to over $100m per year.

According to the survey, holiday rental owners on average spend $2,500 a year on rates; $3,113 a year on maintenance; and have spent $30,587 in the past 5 years on improvements and renovations. “Holiday rental maintains and improves the housing stock in many remote regions - and supports local trades people,” explains Bachcare founder and general manager Leslie Preston. “In addition to this there is the direct benefit of the domestic tourism spend – which we haven’t attempted to quantify in this survey”.

The survey also examined current compliance levels in fire, health and safety regulations.

Preston explains that one of the ‘level playing field’ arguments put forward by MANZ is that baches and holiday homes do not have to meet the fire, health and safety requirements that motels do. Preston says, “This is simply nonsense since houses are houses not motels. A holiday home needs to meet the standards as they relate to a house.” 90% of respondents said their properties had smoke detectors within 3 metres of entrances to sleeping areas – which was the current building requirement.

The group concludes that while the Kiwi dream of owning a piece of paradise is alive and well, it is at risk from over-regulation. Holiday rentals are valuable to local economies.

Unless renting out a holiday house remains an economically viable option, fewer Kiwis will be able to support owning a bach – and be forced to sell. The group says this would put downward pressure on house prices in an already depressed market with less demand if new purchases are unable to rent.

Summary of key survey results

The survey was sent to the holiday rental owners listed on Bookabach and Trade Me’s Holiday Houses and managed by Bachcare and received 2,047 responses.

1) About the properties and economics of Holiday Rental and holiday rental ownership:

- The median property was a $440,000, 3-bedroom free-standing bach or holiday
home accommodating 7 people.

- 58% of properties were owned individually or by groups of owners. 31% were
owned in a family trust.

- An average of $2,505 per year was spent on rates and $3,113 on property
maintenance.

- Owners had invested on average $30,587 on improvements and renovations in the
past five years with exterior and interior painting being the most common, followed

by re-carpeting, a new bathroom, adding a deck, new kitchen and adding a heat-
pump or central heating and insulation.

2) Fire, health and safety:

- Holiday rentals had an incident rate of 0.015% incidents a night. There were 126 recorded accidents or incidents reported by guests staying in properties over the past 5 years out of a total of approx 850,000 nights stay.

- 90% of properties had smoke alarms within 3 metres of every doorway to a sleeping area

- 51% of owner checked smoke alarms every 3 to 6 months, 27% every year and 14%
every visit.

- 75% of owners agreed (55% strongly) that they saw themselves as part of the wider tourism industry.

- 69% of respondents were not familiar with the work performed by their Regional Tourism Organisation (RTO).

- 73% didn’t feel they benefited from the work of their local RTO.

- Only 10% of owners felt they should contribute to RTO funding above and beyond

owners of non-holiday rental properties.

- 82% agreed (67% strongly) that if they had to go through a formal resource consent process they would re-think renting out their holiday home.

Ends

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