Landlord awarded tenant's Airbnb profits after property illegally subleased

A central Wellington landlord has been awarded a tenant's Airbnb profits for the first time in New Zealand after they illegally sublet the property. Photo / Phillip Capper

A Wellington landlord has been awarded a tenant's Airbnb profits in a decision that could open the door for property owners to recover profits from subleasing.

The tenant had been illegally subleasing the landlord's Bellagio Apartment in central Wellington on at least 54 occasions over a six month period. The tenant made more than $12,450.

The Residential Tenancies Act does not specifically allow for landlords to recover profits earned by a tenant through subleasing when there is a breach of their Tenancy Agreement. The agreement in the case did not allow the tenant to have an Airbnb arangement without the landlord's consent.

But in this case the Tenancy Tribunal found the landlord could recover the profits from the sub-leasing activity.

Morrison Kent senior solicitor Shehan Gunatunga said this potentially precedent setting case added further reassurance for landlords when it came to sub-leasing breaches.

"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," Gunatunga said.

The tribunal found the landlord could recover the profits from the subleasing activity after Gunatunga sought an "account of profits" by demonstrating it was unreasonable to allow the tenant to profit from a breach of the tenancy agreement.

The tenant's action was the worst breach of the Tenancy Agreement that Nice Place Property Management company director Keith Powell said he had seen after 13 years in the business.

Powell took over management of the apartment property after the property owner suspected his apartment was being sub-leased.

Upon discovering that the suspicion was correct, Powell contacted the tenant to address the breach.

The tenant stopped rent payments, installed a dead bolt and left.

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

In addition to the profits from subleasing the apartment on Airbnb, the tenant was also ordered to pay unpaid rent, exemplary damages for abandonment, subleasing and replacing locks, as well as costs for door replacement.