Propertyscouts New Plymouth

Tenant forced to handover Airbnb profits - 25th May 2018

Tenant forced to handover Airbnb profits

The talking point this week comes from a Tenancy Tribunal ruling in Wellington where the tenant was forced to handover their profits made through Airbnb. This will set a nationwide precedent for landlords and put tenants attempting to sublet on notice. Read the article below:

The landlord of a Wellington property has been handed the tenant's Airbnb profits, by the Tenancy Tribunal.

The tenant had illegally sublet the Bellagio apartment, in central Wellington, on at least 54 occasions over six months. He made more than $12,450.

The rent for the apartment was $650 a week.

The owners, based in the United States, asked a property manager, Keith Powell, of Nice Place Property Management, to investigate.

He contacted the tenant in December 2017 to address the breach. The tenant had signed an agreement that said the property could not be sublet, including on Airbnb and similar platforms, without the landlord's written consent.

The tenant then stopped paying rent within a week and left the apartment, claiming that a window in the property had been damaged by the 2016 earthquakes and was unsafe.

"It's unusual to see the Tenancy Agreement explicitly state that sub-leasing on Airbnb is prohibited," Powell said.

"So, finding that in just six months the tenant had done so on at least 54 separate occasions, missed rent, installed a dead bolt on the door and then disappeared, you've got to wonder what was going on."

Shehan Gunatunga from Morrison Kent Lawyers, representing Powell, successfully sought an "account of profits" by demonstrating it was unreasonable to allow the tenant to profit from a breach of the tenancy agreement. Accordingly, the Tribunal found the landlord could recover the profits from the sub-leasing activity.

After costs were taken into account, that was determined to be $2150.

Gunatunga believed it to be the first time an "account of profits" has been allowed under these circumstances in New Zealand.  

"Being able to recover the profits from the sub-leasing activity sets a precedent, meaning there is now a legal basis for seeking that the profits be paid to an aggrieved landlord where a tenant sublets their rental property in breach of the tenancy agreement. This adds another layer of protection in situations of sub-leasing, which is becoming much easier for tenants to do."

The tenant was also ordered to pay unpaid rent, exemplary damages for abandonment, sub-leasing and replacing locks, as well as costs for door replacement.

The tenant did not appear at the hearing.

Powell has previously pursued other cases against Airbnb-using tenants. Last year, the Tenancy Tribunal awarded $1000 to the property owners of a property he managed for "mental distress", and exemplary damages of $300.

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