How your spare rooms could earn you extra cash

Sitting on a piece of unused real estate in your home? You could put it to work, but make sure you understand what’s expected.

Instead of accumulating junk, spare rooms throughout New Zealand are being used to earn homeowners extra cash. Thousands of New Zealanders have embraced the idea of generating extra income while meeting interesting new people, letting rooms and whole houses to travellers and holidaymakers, as well as short-term boarders such as foreign students.

Online booking sites like the global Airbnb or local Bookabach make it easy to connect with travellers. Simply download the app, take a few snaps, fill in your profile and you’re free to create your own listing. By comparing other similar properties in your neighbourhood, you can decide how much to charge per night. The online platforms handle all payments, including bonds, with a small service fee. Airbnb takes 3 percent while Bookabach charges 5.75 percent per booking.

Payments via the app are seamless and because hosts rate guests, you can read the reviews and vet your guests.

Apartment owners who regularly sublet or rent via a site like Airbnb may face opposition from other owners and the body corporate, particularly if visitors are noisy. It pays to check this out before joining up.

Horror stories about Airbnb guests holding parties and damaging property do exist. However, issues are rare in New Zealand and the review system, just like Uber’s, is designed to keep people honest. Both Airbnb and Bookabach offer over $1 million in liability insurance. Many normal house or contents policies do not cover for accidental damage caused during short-term rentals.

If you’re keen to engage with another culture, playing host to an international student is a popular way of earning extra income. You can apply through sites like, or tertiary institutes. Fees for a room in a home range from $180 to $250 a week. The financial benefits of hosting foreign students are not huge. And bridging the language gap and cultural barriers dealing with a hormonal homesick teen may not be everyone’s cup of tea.

Other negatives include regular cleaning, changing bedding and sometimes cooking for the students.

Easy Money During Peak

If you live in a good location close to central cities, tourist attractions and amenities, you can make good money from Airbnb and Bookabach, especially during peak tourist seasons.

The research website AirDNA found New Zealand’s most profitable Airbnb in Queenstown is rented out at $2,800 a night (in 2017) and has earned $337,000 in a year. Auckland’s top earner is rented out at $1,000 a night and has brought in $169,000 in a year. That’s for a whole home, not just one room.

A report by Deloitte earlier this year said property owners renting out their homes on Airbnb pocketed a median additional income of $4,400 a year. The figures vary. Research by Infometrics for March 2017 stated the average annual rental per host at $3,200 in Auckland, $8,600 for Queenstown and $1,550 for the rest of New Zealand.

A quick look at the Airbnb site during winter showed 86 listings for a room for two guests in Mt Eden, Auckland, with the charge varying between $76 and $255 not including the cleaning fee; Airbnb suggests this should be $20 a stay.

To find out how much you could make for your room, go onto Airbnb calculators or use

Hosts should also be aware they are liable to pay tax on all rental income. Income from these websites is very traceable and penalties apply for avoiding tax. Airbnb and Bookabach collect taxpayer information from hosts so they can provide an account of their earnings each year. You can claim proportionate expenses for the period that you’ve rented out the space, for example rates, insurance and advertising.

GST also applies if you earn more than $60,000. Good record-keeping is essential for allocating costs and keeping track of income and expenditure.

If you have five boarders or more, for example foreign students, you must complete an annual tax return. If you have four or fewer and the income you earn is less than the weekly standard set by IRD - $254 each for the first two boarders, $208 each for the third and fourth - you don’t have to declare this income.

Market Impact

Some market experts have pointed to the effect short-term rentals may have on the long-term rental market as properties are withdrawn by the lure of increased yields from accommodation sites. Overseas, the conversion of housing to short-term rentals is turning formerly residential neighbourhoods into blocks of hotels. There is growing concern over tourist behaviour particularly when whole homes or apartments are offered by absent hosts.

Earlier this year, Auckland Council commissioned a survey to determine whether the rise of online booking platforms negatively impacted on supply and affordability of residential rentals.

It found full-time Airbnb listings in most areas had very little impact on the private rental market, but in some popular tourist areas such as Waiheke Island, there was potential for Airbnb to have a negative impact for local renters.

Researchers warned that in popular areas, at a time of housing shortages, the earning potential from Airbnb could fuel already high house prices.

As part of Christchurch’s review of online accommodation, it has required residential property in a residential zone to have resource consent for short-term guest accommodation unless it meets the standards for a bed and breakfast.

Queenstown Lakes District charges extra rates on holiday homes with multiple rentals and is considering restricting short-term lets.

Auckland Council is now planning to charge a bed tax - the Accommodation Provider Targeted Rate - and business rates, for owners who earn significant income from homes listed on sites like Airbnb. If you’re letting out a single room, those taxes won’t apply.

So, if you’re sitting on a juicy piece of unused real estate in your home, it might pay to put it to work. Just make sure you understand what’s expected.


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