In what's believed to be the first ruling of its kind, a Wellington couple who sub-let a rental property without its owner's approval have been found to be in breach of the Residential Tenancies Act.
The couple, who sub-let the property on Airbnb have been ordered to pay $1000 to the owners for mental distress and exemplary damages of $300.
Wellington-based property manager Keith Powell had lodged the case with the tribunal after the two tenants were discovered to have hosted seven groups at the property at a profit of $1568 in July and August last year.
In a decision made public today, it was revealed the tribunal last month ruled in his favour and deemed the tenants' actions were in breach of both the act and the individual tenancy agreement.
In a decision document released to the Herald, the tribunal adjudicator said the act and the tenancy agreement both allow a tenant to sublet and assign a property, unless it's "expressly prohibited".
"It is clear that in this situation sub-leasing was expressly prohibited.
"The Tenancy Agreement specifically provides that 'The tenant shall not assign or sublet the tenancy without the landlord's written consent'."
Powell, the director of Nice Place Property Management, said the two tenants had earlier attempted to get out of the lease before it ended but this was denied because it was "not in the best interests of the owners".
The decision document revealed the two tenants, from the United Kingdom, had just bought a new house and wanted to sub-let the property in order to cover the extra rental costs.
It outlined how the owners of the house who had not given permission for it to be sublet as they were anxious at the potential mistreatment of their home by people they didn't know.
Powell said when the owners found out about the situation they cut their holiday short to come back and sort it out.
"They were quite over-wrought thinking that people had been living in their home that their property manager had not had the opportunity to vet and approve on their behalf."
The owners said to the tribunal it was "absolutely heart-breaking to think that people could be so uncaring and disrespectful of us and our things".
Powell said it took the owners about 10 days to get the property back into the condition it was when they left it.
He said the fine wasn't a big enough deterrent.
"If tenants are knowingly putting the accommodation in the hands of groups that have not signed the tenancy agreement and 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."
However, the tenancy tribunal adjudicator said in the document the breach sat between a mid-high range and said the $1000 was sufficient to cover the mental distress whilst also taking into consideration that the tenants ceased the breach as soon as requested and that there was no lasting physical damage to the property.
The extra $300 was deemed sufficient in light of the fact the tenants showed "genuine remorse" had no previous offending history and "they are very unlikely to repeat such a breach".
Powell had one message for tenants wanting to do things outside of their rental agreement: "Get it in writing from your property manager, or don't do it".
Property management expert David Faulkner from RealiQ said there were serious insurance implications for landlords who weren't aware their properties were on Airbnb.
"The consequences of this are 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.
"The likelihood is that the liability would fall back on the tenant as they intentionally breached their Tenancy Agreement by sub-letting without the consent of the landlord."