Winter is almost over – time to rent the bach out

Like many Northlanders, you may be looking to rent the family bach out for some of the warmer months of the year. However, in addition to mopping the floors, and mowing the lawns, it is important you are up to date with your rights and obligations as a landlord.

While many property owners are well aware of their general obligations and rights as a landlord, with the emergence of websites and apps such as Air BnB, it is becoming more and more difficult to keep up to date.

While being considered the first case of its kind to be brought to the Tenancy Tribunal in New Zealand, the caseNice Place Property Management Limited v Paterson highlights a common scenario, likely occurring throughout New Zealand every day.

The Facts:

A Wellington couple had entered into a general residential tenancy agreement with the landlord of the property. In this agreement, sub-leasing was expressly prohibited. Over a period of 6 months however, the couple had hosted seven groups from the website Air BnB for a profit totalling $1,568.00. Eventually after the property manager discovered what was happening, a case was lodged with the Tenancy Tribunal.

The Result:

The Tenancy Tribunal had found that the tenants were in breach of their tenancy agreement. What made this ruling particularly interesting is that under the Residential Tenancies Act 1986, a landlord is not specifically entitled to the recovery of profits made by a tenant through illegal subletting. However, in this case the tenants were ordered to pay the Landlord an “account of profits, and exemplary damages. As a landlord this now means that you may be able to recover some of the profits obtained by tenants, who were illegally subletting your property. In the past this was seldom seen.

Take home messages:

It is important to note that the Residential Tenancies Act 1986, states that a tenant “may” sublet and assign a lease unless expressly prohibited.

If you are a landlord looking to rent your bach out during the Summer, it is important that the agreement you use expressly states subleasing is expressly prohibited, unless written consent is given.

If you suspect that your property is being subleased without your permission, you may want to look at bringing a claim to the Tenancy Tribunal.

If you discover your property is being subleased without your permission, immediately terminate this arrangement as you may be voiding your insurance policy.

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