Auckland council stamps out innovation and home-based businesses

Working from home in Auckland is under threat as the city council looks to apply commercial rates to home-based businesses. Photo / Pixabay.

Auckland Council targets homeworkers

Faster broadband speeds and growth in the digital economy mean plenty of people have the option to start a small business from home. If they have a spare room they can use as an office then they can get set up pretty quickly, and it can mean one less car on the road. Everyone’s happy.

A one-man band can grow to be a family affair and go on to expand into commercial premises and employ people. Kiwi icon McLaren (cars) started in a garage; as did Apple Computers and Walt Disney. Yes, tiny acorns can grow to be massive enterprises.

But Auckland City Council is just about to put the spanner in the works of every home-based freelancer, contractor and small business.

It wants to apply commercial rates to the home or part of a home that’s used for business purposes. Now, while some home-based businesses might be able to survive their annual rates bill going up by thousands of dollars; there will be plenty of people with part-time home-based businesses who will have to shut up shop. Driven out of business because of the higher rates.

And that’s where the council’s penny-pinching will hit people hardest and kill innovation across the SuperCity. Often, what can start as a part-time hobby can grow to be a part-time money-making venture and develop into a fully fledged business.

The council’s thirst for cash will drive innovators underground or out of the city. And it doesn’t seem right nor fair.

One or two people working from a spare room in the home does not place any more weight on council services than two unemployed people sitting in a spare room at home. In fact, the two motivated people running a teeny-weeny business will be buying stuff and paying taxes on their profits.

Now the type of home-based workers I am thinking of include writers, editors, video editors, audio engineers, mobile DJs, book editors, photographers, magazine and web designers… They sit relatively quietly at home doing both essential and creative work with little to zero impact on anything.

It is not clear at this early stage how City Hall will identify those working from home. First stop will likely be TradeMe; then perhaps the IRD in some new yet-to-be-hatched data sharing agreement. Is it really coming to pass that what we do inside the walls of our own home will be of interest to the council? Yes, it does seem so.

Landlords

And what of the landlord that rents their property to a tenant who  decides to start a small business? How will the landlord react when their rates go shooting up because of what their tenant is doing to earn a crust?

I’m sure landlords will quickly amend their tenancy agreements to prevent tenants from running a business on the premises. And this  impacts people’s freedom to provide for their family and invest in themselves.

Selling your home

Now consider the person who runs a business from home, and then wants to sell up and move elsewhere.

The higher rates will be passed on to the new owner of the home until the purchaser can appeal the rates bill and wait until the new rates are issued. Meanwhile, the new owner will have to pay commercial rates; even if they are not running a business from the property.

One estate agent tells me anyone with commercial rates applied to their home will have to lower their asking price to compensate for it.

These are dark days in Auckland.

If Auckland Council wants to kill innovation and home-based businesses dead – they’ve cracked it. Hopefully someone will see sense and end this madness.