FOR IMMEDIATE RELEASE

MONDAY 6 MARCH, 2017

Tenancy Tribunal makes first ruling on Airbnb case: ruling favours landlord, but tenants still profit

In the first ruling of its kind in New Zealand, the Tenancy Tribunal has ruled that sub-letting a rental property on the online accommodation marketplace Airbnb, is in breach of the Residential Tenancies Act, but the tenants who lost the case had made over $1,500 and weren’t required to pay it back.

The Tenancy Tribunal found in favour of Wellington-based property manager Keith Powell, that his two tenants had, in fact, breached both the Residential Tenancies Act and the Tenancy Agreement for sub-leasing the property via Airbnb. But while the couple made $1,568 from ‘hosting’ guests found on Airbnb, the Tribunal only awarded $1,000 to the property owners for “mental distress”, and exemplary damages of $300 as a deterrent from doing it in the future.

Powell, director of Nice Place Property Management, says the deterrent doesn’t go far enough.
“If tenants are knowingly putting the accommodation in the hands of groups that have not signed the Tenancy Agreement, and making a profit, then I don’t think a $300 fine is going to stop anyone. At the very least they should be required to pay the revenue back they made from Airbnb,” says Powell.

In cases where the landlord has been in breach of the Tenancies Act tenants have been awarded a full refund of their rent, bond and in some cases damages as well, but in cases where tenants have breached the Act, the same penalties are not imposed.

The owners of the property were travelling at the time and returned immediately upon learning their fully furnished home had over seven different groups through, and were “quite over-wrought” thinking that people had been living in their home that their property manager had not had the opportunity to vet and approve on their behalf.

“It was absolutely heart-breaking to think that people could be so uncaring and disrespectful of us and our things. It took me 10 days to get our home back as it was when we left it,” said the owner of the property who would prefer to remain anonymous.

The tenants were in a fixed-term lease for four months, but since finding a house had tried to get out of their lease early. Powell said that he did not let them out of their agreement early because it was not in the best interests of the owners.

“Fixed-term guarantees the property owners income for a fixed period of time, and guarantees the tenants a place to live. Decisions are made based on those guarantees, so no, we aren’t able to let tenants out of their lease early because they’ve found a home. I get they were creative, but they broke the law and breached the agreement,” said Powell.

Property management expert David Faulkner from RealiQ said there are serious insurance implications for landlords that aren’t aware their properties are on Airbnb.

“The consequences of this is that if serious damage does occur on the premises, insurance companies may not cover the damage as the property is not being used as a principal place of residence by the tenants,” said Mr Faulkner.

“The likelihood is that the liability would fall back on the tenant as they intentionally breached their Tenancy Agreement by subletting without the consent of the landlord.”

Powell said the last he wants is to be going to the Tribunal with tenants, and he has good relationships with most of them, but one message is clear – get it in writing from your property manager or don’t do it.

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