The High Court has dismissed a judicial review of a controversial tax on Auckland Airbnb accommodation.

Bachcare filed the application for a legal review of the Accommodation Provider Targeted Rate which was introduced by Auckland Council in 2017. It applies to online accommodation providers that are rented for more than 28 nights per year on websites like Airbnb and Bookabach.

The decision was welcomed by Auckland Mayor Phil Goff who said he was pleased but not surprised. "The targeted rate is a common-sense tool that ensures accommodation providers who directly benefit from tourism are contributing to the costs associated with promoting events and marketing Auckland to the world," he said.

Some Airbnb and Bookabach owners have decided to shut down rather than pay the new rate.

Auckland hotels and other commercial accommodation providers will also be forced to pay the city’s targeted rate following the High Court decision.

TIA Hotel Sector Manager Sally Attfield said that the judge’s finding that there is no requirement to demonstrate a proportionate relationship between a ratepayer's liability and the benefit they receive from the rate itself, is surprising. “The concern is that this opens the door to councils to impose targeted rates on any group of ratepayers they choose, for any reason.”