Renters can’t keep Airbnb profit: ruling
A court ruling has cleared the way for landlords to take any profits earned by their tenants on Airbnb.
In May, it was reported that the Tenancy Tribunal had ordered a tenant, Jeff Paterson, to hand over the profit made from short-term letting the Wellington apartment he lived in.
After costs were deducted, he was told to hand $2150 to his landlord.
But the solicitor acting for the landlord, Nice Place Property Management, said that was not enough, and appealed the case to the District Court. The resulting decision may have ramifications for all tenants and landlords.
Senior solicitor Shehan Gunatunga, of Morrison Kent, said the tribunal should have taken the $13,695 Patterson made from subletting the property for 55 days and then deducted his own rent cost, of $5107, and $1000 in expenses.
That would have left $7587.70 in profits to pay.
The tribunal had instead calculated its $2150 by deducting the gross revenue Patterson received, from the rental he paid for the entire six months of his tenancy.
Judge Chris Tuohy agreed with Gunatunga. He found in the landlord’s favour, and added $5437 to the amount the tenant must pay.
Patterson also owed unpaid rent and a bill for damages to the property and exemplary damages under the Residential Tenancies Act, taking his total owing to just under $17,000.
‘‘The term breached was as clear as a bell. It is obvious from the figures in this case that a tenant could make several hundred dollars’ profit each week simply by renting the apartment and then subletting it through Airbnb continuously in blatant breach of the tenancy agreement,’’ Tuohy said.
He said the damages available under the Residential Tenancies Act were inadequate.
Subletting is usually prohibited in residential tenancy agreements.
Gunatunga said the case had wider implications because it had been decided by a court, rather than the tribunal.
‘‘We anticipate tenants will be deterred from carrying out illegal subletting, and landlords can rest easy knowing they can seek to recover subletting profit in these circumstances with certainty.’’
He said, until now, it seemed that most people who found tenants were making money from subletting were only being awarded the maximum $1000 in exemplary damages under the Residential Tenancies Act.