Tenancy Tribunal makes ruling on Airbnb sub-lease breach

Recently, the Tenancy Tribunal ruled in our favour that sub-letting a rental property on the online accommodation marketplace Airbnb is in breach of the Residential Tenancies Act, but there is far more to the story than a simple breach.

Breaking the rules is profitable

On the completion of what was quite a lengthy time to rule, the Tenancy Tribunal found that two of our tenants (a couple) had, in fact, breached both the Residential Tenancies Act and the Tenancy Agreement for sub-leasing a property via Airbnb.

So, the couple were found in breach of two Acts, and were fined just $300 as a deterrent, and ordered to pay $1,000 to the property owners for “mental distress”. The couple made $1,568 from ‘hosting’ guests via Airbnb.

What?

In my opinion, 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 are 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.

A one-sided approach

In cases where the landlord has been in breach of the Tenancies Act, tenants are usually awarded a full refund of their rent, bond and in some cases damages as well – fair enough!

But in cases where tenants have breached the Act, the same penalties do not seem to be imposed – as in this case.

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. They were “over-wrought” to say the least. They had people living in their home that we had not had the opportunity to vet and approve on their behalf.

The property owners were heartbroken, they submitted an impact statement to the Tribunal saying they couldn’t believe “people could be so uncaring and disrespectful of us and our things.”

The Agreement protects both parties

The tenants were in a short fixed-term lease for four months, but since finding a house to purchase had asked to get out of their lease early, however, as it was not in the best interests of the property owners, we respectfully declined.

I get they were being creative, but they broke the law and breached the agreement. A fixed-term lease 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 don’t let tenants out of their lease early because they’ve found a home.

Insurance implications

I spoke to property management expert David Faulkner from RealiQ who 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” - David Faulkner.

The last thing I want is to be going to the Tribunal with tenants, we have a good relationship with most of them, but one thing I urge all tenants – get it in writing from your property manager or don’t do it.

 
Nick Phillips