In The Know - Property Management
2 October 2019
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Case Update: Tenants sublet property on Airbnb and Booking.com without consent
The property management company (landlord) in this case applied to the Tenancy Tribunal for compensation and exemplary damages alleging that the tenants had sublet the rental property without obtaining the property manager’s permission.
Law:
Section 44(2A)(a) of the Residential Tenancies Act 1986 denotes that subletting the tenancy without the landlord’s prior written consent is an unlawful act and attracts exemplary damages of up to $1,000 (Schedule 1A).
Where a party has committed an unlawful act intentionally, the Tribunal has the power to award exemplary damages, where it is satisfied it would be fair, having regard to the party’s intent, the effect of the unlawful act, the interests of the other party and the public interest (section 109(3)).
The tenancy agreement contained a clause which prohibited any assignment or subletting without the prior written consent of the landlord.
Evidence
The property manager provided a copy of an advertisement to the Tribunal showing that the “waterfront 2-bedroom apartment” was advertised for $215 per night. One of the tenants were provided as a contact person for the advertisement.
There were various reviews attached to the advertisement evidencing that others had stayed in the property. The earliest dated guest review was only four days after the tenancy agreement was signed.
The building manager and the chairperson of the body corporate had also emailed the property manager confirming that at least four different groups of guests had been seen at the property (in person and CTV).
The tenants also continued to rent out the property despite receiving a notice of breach from the property managers requiring the online advertising to be removed.
Finding
The Tribunal found that the tenants had sublet the property with the express purpose of renting it out for profit. The effect of the tenant’s actions were that the neighbours felt that their safety had been compromised. The neighbours also claimed that they had been disturbed by two noisy parties at the property. The owner had suffered stress about her property as well. The Tribunal stated that the interests of the landlord is to select people approved to occupy the premises by ‘checking identity and references, in order to protect the owner and security of neighbours, and in order to comply with body corporate, insurance, and other legal requirements’.
The Tribunal also noted that there is public interest in a rental property being used for its purpose and accordingly, awarded exemplary damages. The Tribunal also awarded a sum that represented the profit earned by the tenants for subletting the property.
Insurance Excesses
REINZ recently spoke with Diane Nelson from Real Landlord Insurance.
Recent changes to legislation regarding tenant liability under insurance claims, mean that if tenants or their guests carelessly damage a rental property, they are liable for the cost of the damage up to four weeks' rent or the landlord's insurance excess (if applicable), whichever is lower. This means that a landlord must disclose any insurance excesses on a tenancy agreement and provide a statement that a copy of the policy wording is available on request by the tenant.
Diane says they have been fielding calls from throughout New Zealand from landlords wanting to increase their insurance excesses (thus bringing their premiums down).
However, they are concerned that many landlords won’t have thought through the ramifications of doing this.
Most claims against building (house) insurance policies are for events (e.g. fire, flood, water damage) that are not the result of tenant damage and therefore the landlord may find themselves in a poor position with having to pay the higher excesses they have nominated. This should be thought through very carefully before changing excesses and the landlord’s financial ability to be able to cover the excess payable.
New Information Sheet - Meth - Guidance for property managers
Need some guidance on methamphetamine contamination?
Click here to access the REINZ Information Sheet on Meth guidance for property managers.
Stuck on something? Check out our information sheets!
Click here for our Information Sheets on:
- Insulation
- Healthy Homes Standards
- Privacy Act Guidance
- Asbestos
- Mould and Dampness in rental properties
Keep an eye out for the following Information Sheet that will be coming soon:
- Residential Tenancies Amendment Act 2019
Any questions/suggestions you have, feel free to contact advisory@reinz.co.nz
Finding the right tenant - what can I collect when someone applies for a tenancy?
