In a ground-breaking decision the Tenancy Tribunal has ordered a former tenant to pay back all profits made during his tenancy by subletting his flat on AirBnB.

The tenant had made an estimated $12,000 profit after subletting his flat over 50 times on AirBnB in 2017. As the tenancy agreement expressly stated that subletting the flat through platforms such as AirBnB was prohibited without the landlord’s consent, the tribunal found that he was in blatant breach of the agreement and needed to “account for all profits” to his landlord. The profits payable to the landlord were subsequently reduced by service fees and other costs.

The Tribunal’s decision is the first to require a tenant to pay back profits made by subletting their flat. Most standard tenancy agreements don’t have such specific clauses prohibiting subletting activity on platforms like AirBnB and in those cases landlords may not be able to claim the profits.

As the tenant abandoned his tenancy after being found to be in breach of his agreement, he was ordered to pay unpaid rent, and damages for abandonment, subleasing and for damage done to the property during the tenancy period.

If you are a landlord and you wish to prohibit subletting such as AirBnB, you should ensure your tenancy agreement clearly restricts this.  If you are a tenant, you should read your tenancy agreement carefully before considering subletting your flat.

Grace Sharp

Solicitor
Wellington