100 million users worldwide are now using AirBnb to find temporary accommodation, and your tenants might be profiting from it. In a case believed to be the first of its kind, a Wellington couple were deemed to be in breach of the Residential Tenancies Act when it was discovered they had sublet their property without the knowledge of their landlord or property man-agement agency, pocketing a tidy $1,568. They have since been ordered to pay $1,300 to the landlord. Tenants are see-ing dollar signs with Airbnb. Here’s what you need to know about Airbnb and your rental property.
Since its inception in 2008, Airbnb has become to short term accommodation what Uber has become to taxis.
Founded in 2008 and generating a rev-enue stream of $900 million in 2015 alone, the app was created with a mind to connect those seeking short term ac-commodation solutions to homeowners in destinations around the world keen to capitalise on vacant properties and vacant rooms.
Contrary to mainstream renting, this income is not guaranteed, as would be lodgers choose the nights that they wish to stay - much like a hotel. As an inves-tor then, this is obviously not the wisest way to search for a return on your investment property, as more guaranteed income can be found from a longer term tenant.
For tenants however, it can provide a welcome financial relief in the wake of increasing rental prices across the coun-try. It is prudent to note however, that tenants who sublet their property on Airbnb without prior consent from the landlord would be in breach of the Residential Tenancies Act. Section 44 (Assignment, subletting, or parting with possession by tenant) states the following:
- There may be including in a tenancy agreement a provision that expressly and unconditionally prohibits the tenant from assigning, subletting, or parting with possession of the premises during the term of the tenancy.
- In the absence of such a provision, the tenant may at any time during the tenancy assign, sublet, or otherwise part with possession of the premises with the prior written consent of the landlord and in accordance with any conditions attached to that consent by the landlord.
In light of these subsections of the act, tenants clearly cannot get away with the blatant subletting of property and this is something which should be rigidly policed by landlords.
How can subletting be such a serious issue then? What is the harm in allowing the tenants some leeway? Firstly, there is no way to determine who is in your property at any given time. During our process of tenant selection, a complete and thorough background check is tak-en out. If tenants sublet your property, a plethora of people may find themselves under your roof. With the fast approach-ing British and Irish Lions rugby tour, and soaring accommodation prices, as a landlord it is imperative that you know who is living in your asset.
With the potential for excessive damage thanks to intoxicated rugby fans, you need to be assured that your property is exempt from this threat. Likewise, methamphetamine is something to be considered. When tenants choose to sublet the property, they open it up to tenants of illintent. Recently a bach in Mangakino was subject to destruction by fire, from what was believed to be a popup meth lab. Needless to say, this all adversely impacts the returns on your investments as any potential damage repair can be a damaging blow to the in-coming rental funds.
Your first point of call however is to explicitly outline in all future tenancy agreements that subletting is prohibited. By doing so tenants are forced to be mindful of the repercus-sions should the temptations to cash in at the owner’s expense arise. We at Tommy's do not allow any form of subletting and actively monitor out tenants for this.
If you would like to dicuss our property management services then please feel free to contact Jack Vale on 022 020 1253.