The Wellington rental landscape is evolving rapidly, with property owners navigating a crossroads: should a portfolio focus on stable, long-term tenancies or embrace the dynamism (and risks) of short-term letting? At Taylor Property Plus, we help local landlords decode this decision, offering unique insights, strategy, and real-world guidance.
This supporting post builds upon our hub article “Adapting to Changing Tenant Needs: Flexible Living Solutions in Wellington” and deeper dives into remote work-friendly rentals, co-living spaces, and micro-apartments.
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Wellington’s Flexible Rental Landscape
Tenant priorities have been redefined by global mobility, rising living costs, and new lifestyle patterns, especially remote work and flexible living. Wellington property owners now seek flexible rental strategies to thrive, and these often mean understanding and blending short-term and long-term rental models.
Pros and Cons of Short-Term Rentals
Short-term rentals (less than six months) have grown in popularity due to the rise of digital nomadism, international travel, and changes in local accommodation demand. Common platforms like Airbnb, Vrbo, and specialised Wellington holiday home portals such as bookabach have made listing properties easier, but new challenges have emerged.
Advantages:
- Flexibility and Control: Owners can set rates and occupancy requirements, use the property for personal stays, and respond quickly to changes in demand or market conditions.
- Potentially Higher Returns: Short-term rentals can command higher nightly rates, particularly during events, holidays, or periods of high tourism demand.
- Frequent Inspections: More frequent turnover allows owners and managers to inspect and maintain properties more regularly.
Disadvantages:
- Income Volatility: Occupancy rates can fluctuate, with risks of vacancy during off-peak seasons or local disruptions.
- Increased Management Load: Higher turnover means more cleaning, preparation, and communication with guests.
- Regulatory Risk: Increasingly, Wellington and other cities have imposed limits on short-term rental use to protect long-term housing supply. Licensing, maximum rental periods, or guest limits may be required.
- Higher Running Costs: Owners typically cover utilities, internet, and furnishing costs for fully-equipped short-term rentals.
Pros and Cons: Long-Term Rentals
Long-term rentals (six months or longer) remain Wellington’s foundation, especially for students, professionals, families, and local workers.
Advantages:
- Financial Stability: Longer leases guarantee a steady and predictable income stream, providing security for property owners.
- Lower Ongoing Costs: Tenants pay their own utilities and maintain contents insurance. Maintenance demands are lower thanks to reduced turnover.
- Community Contribution: Tenants who stay longer contribute to local communities, often resulting in fewer disturbances and stronger neighbourhood ties.
Disadvantages:
- Limited Flexibility: Owners have less control over access to the property, and changing rental rates or ending tenancies can be complex due to legal protections for tenants.
- Challenging Tenant Selection: Poor vetting can lead to disputes, rent arrears, or lengthy Tenancy Tribunal processes.
- Potential for Lower ROI: Nightly rental rates are lower compared to short-term stays. Market rent is typically fixed for the duration of the lease.
Legal Considerations Unique to NZ
Short-Term Rentals:
- GST and Taxation: Earnings from short-term rentals must be declared. If revenue exceeds NZD 60,000 annually, GST registration is required.
- Health and Safety: Properties must meet Healthy Homes Standards and local council regulations. Guest numbers and stay duration may be restricted.
- Resource Consent: Renting for more than 60 days a year or hosting over eight guests may require special consent in Wellington and other regions.
- Applicable Law: Short-term (holiday) rentals are mainly covered under consumer law, not the Residential Tenancies Act, so clear written agreements are critical.
Long-Term Rentals:
- Residential Tenancies Act: Governs most long-term tenancy relationships, setting out rights and obligations for landlords and tenants.
- Healthy Homes Standards: All long-term rental properties in Wellington must comply with minimum standards for insulation, heating, ventilation, moisture, and drainage.
- Bond & Rent Rules: Bonds must be registered and rent increases follow strict procedures.
Flexible Rental Strategies for Today’s Market
Wellington landlords increasingly see value in adopting a mixed or flexible rental strategy, offering both short-term and long-term rentals either through multiple properties or by leveraging times of low demand.
Key Strategies:
- Rent Reviews: Regular assessment of market rates helps to optimise returns and avoid underpricing. Use platforms like Trade Me and agency reports to benchmark.
- Property Upgrades: Ensure compliance with legal requirements and tenant expectations for both types. This includes energy-efficient heating, internet upgrades, and security enhancements.
- Portfolio Diversification: Balancing apartments, homes, short-term units, and long-term leases across venues and locations spreads risk and improves cash flow.
- Tech Adoption: Property management software can handle bookings, payments, maintenance requests, and communication for both rental types.
- Marketing: Use professional photos, SEO-friendly listings, and reputable platforms to appeal to the different demographics for each rental model.
- Flexible Lease Terms: Short six-month contracts for students, corporate tenants, or those seeking transitional living can fill gaps between longer tenancies.
How Landlords Can Mix Things Up in Wellington
Here are some of the ways that landlords are mixing things up in Wellington when it comes to short term and long term rentals:
Case Study 1: Diversifying in Te Aro
A local landlord with several apartments in Te Aro moved to a mixed portfolio after COVID-19 travel disruptions. Short-term bookings via Airbnb are offered during peak tourism seasons (summer, Wellington events), while longer-term tenants occupy units during winter or off-peak periods. This adaptive strategy led to a 19% higher annual yield compared to single-use tenancy.
Case Study 2: Long-Term Community Success in Mount Victoria
A landlord who resisted the short-term rental trend maintained a stable group of tenants for over eight years in Mount Victoria. By investing in Healthy Homes upgrades and prioritising tenant retention (rent discounts for multi-year leases, prompt maintenance), they not only ensured full occupancy but also fostered a neighbourhood community that attracts referrals and minimises turnover.
Case Study 3: Adapting Regulations in the CBD
Owners of multi-unit buildings faced Wellington Council’s tightening restrictions on Airbnb. After participating in consultation with local authorities, they shifted some properties back to traditional leases to meet regulatory compliance and avoid fines.
The Latest Stats on Short and Long Term Rentals
- In New Zealand, short-term rental income must be declared for tax purposes, and GST applies above NZD 60,000 annual turnover.
- Wellington City Council has proposed new licensing and night caps to limit the growth of Airbnb and similar platforms as of 2025.
- The short-term market can be volatile, with occupancy rates in central Wellington fluctuating by up to 40% year-on-year.
- Over 68% of Wellington landlords now consider flexible letting strategies to maximise returns and reduce risk, compared to just 45% in 2021.
FAQ: Short-Term vs Long-Term Rentals Wellington
What are the main differences between short-term and long-term rentals?
Short-term rentals offer flexibility, higher rates, and rapid turnover, but with increased management needs and regulatory risk. Long-term rentals deliver stable income, lower maintenance, and legal protection for tenants.
What legal regulations apply to short-term rentals in Wellington?
All short-term rental owners must declare income, consider GST registration, comply with Healthy Homes Standards, and check local council rules on resource consent, guest numbers, and stay lengths.
How do I manage both rental types in one portfolio?
Regular rent reviews, proper property upgrades, legal compliance, technology adoption, and diversifying locations and tenant profiles help optimise mixed portfolios.
Are short-term rentals always higher earning?
Not always. While they can produce higher returns during peak demand, off-season vacancies and regulatory changes can offset this benefit.
How is the Wellington market changing?
Council restrictions and changing tenant expectations are making flexible lease options (short-term contracts, co-living, micro-apartments) more common and rewarding for landlords willing to adapt.
For further reading:
Explore our other articles in this series:
- Airbnb vs Long-Term Rentals in Wellington
- Maintaining Competitive Rents
- Exploring the Rental Landscape in Wellington’s Suburbs
