— Landlord wins $12,450 payday

A Wellington tenant’s secret Airbnb side hustle just got legally dismantled. The Tenancy Tribunal ruling means landlords can now claim ALL profits from unauthorised sublets.

In what might be the most satisfying legal smackdown of 2025 for Kiwi landlords, a Wellington property owner just scored their tenant’s entire Airbnb profit after the tenant turned their Bellagio Apartment into a rental side hustle.

The tenant had been secretly listing the central Wellington pad on Airbnb, hosting at least 54 bookings over six months and pocketing $12,450. When caught, they pulled the tenant trifecta: stopped paying rent, installed a deadbolt, and ghosted the landlord.

Recovering profits not guaranteed

The Residential Tenancies Act doesn’t explicitly allow landlords to recover these profits. But in a potentially precedent-setting decision, the Tenancy Tribunal found it was “unreasonable to allow the tenant to profit from a breach” and ordered all earnings returned to the rightful owner.

Why this changes the game

Morrison Kent senior solicitor Shehan Gunatunga (who secured the victory) said this ruling “adds another layer of protection in situations of sub-leasing, which is becoming much easier for tenants.”

The legal manoeuvre? An “account of profits” claim: essentially arguing that profiting from contractual violations shouldn’t be allowed. Think of it as the rental market equivalent of “crime doesn’t pay.”

Nice Place Property Management’s Keith Powell, who managed the case, described it as “the worst breach of the Tenancy Agreement” he’d seen in 13 years of property management. That’s saying something.

Financial damages report

The tribunal didn’t stop at clawing back the Airbnb profits. The tenant also got hit with: unpaid rent; exemplary damages for abandonment; costs for subleasing without permission; expenses for replacing locks and the door; and penalties for installing unauthorised deadbolts.

The total bill? Let’s just say the tenant’s illicit property management career is ending with a financial hangover that no number of 5-star reviews can cure.

Subletting 101

The 2020 amendments to the Residential Tenancies Act gave tenants the right to sublet unless the rental agreement specifically prohibits it. Here’s what this means for landlords:

  1. Your rental agreement matters more than ever. It’s time to update your tenancy agreements to expressly forbid sub-leasing.
  2. You can’t “unreasonably” withhold subletting permission. If your agreement doesn’t prohibit subletting, you need legitimate reasons to say no when asked.
  3. Insurance implications are a valid reason to restrict subletting. Many insurance policies don’t cover subletting scenarios or charge higher premiums – a perfectly reasonable basis for prohibition.

Four landlord protection strategies

  1. Update your tenancy agreements ASAP. Explicitly prohibit subletting.
  2. Schedule quarterly inspections. The legal minimum in NZ is once every four weeks with proper notice. Use these inspections strategically to check for signs of commercial use.
  3. Implement rigorous tenant vetting practices. Thoroughly verify references, conduct credit and background checks, and carefully assess tenant history to minimise risk.
  4. Set up Google alerts for your property address. You’d be surprised how many unauthorised listings can be found with a simple Google alert for your property’s address and neighbourhood.

Tools to catch Airbnb violators

  • AirDNA: Scans Airbnb listings in your area and can alert you to new properties matching your address
  • SubletSpy: AI-powered monitoring that crawls rental platforms for matches to your properties

Red flags

Here are some common signs of unauthorised subletting:

  • Sudden installation of key lockboxes near the entrance
  • Unusual wear and tear on furnishings
  • Neighbours reporting different people coming and going
  • Professional-quality photos of your property appearing online
  • Multiple sets of toiletries or luggage visible during inspections
  • Tenant suddenly becoming unavailable for routine inspections

Legitimate ways to sublet

If you’re a tenant reading this, don’t despair. Legitimate subletting is possible:

  • Review your agreement first: Is subletting prohibited? If not, you have a legal right to request it
  • Make formal written requests: Include details about the subtenant and duration
  • Offer to cover additional insurance costs: This removes a major landlord objection
  • Propose a profit-sharing arrangement: Some landlords will approve if they get a percentage
  • Consider assignment instead: For longer-term arrangements, a full assignment might be better

Final thought

The best tenancy agreements are written not for the tenant you have, but for the tenant they might become.

Call 0800 GOODWINS to dive deeper into rental market protections and the ins and outs of subletting.