We are pleased to have acted for a London based housing charity for a claim for unjust enrichment relating to the profits made by their tenants following the subletting of their property on Airbnb. The tenants were ordered to pay our client £18,000 relating to the profit made, together with an order for our client’s legal costs.
Where a tenant sublets their home, provided certain conditions are met pursuant to the Prevention of Social Housing Fraud Act 2013, the social landlord (a Registered Provider of Social Housing, Registered Social Landlord in Wales or a Local Authority) has a statutory right to apply for an unlawful profit order. Such an order requires a tenant to pay to their social landlord an amount representing the profit they made as a result of breaching an express or implied term of the tenancy agreement prohibiting the subletting. Crucially, the maximum amount payable under such an order is limited to the total amount received by the tenant as rent, minus any rent paid to the landlord during the offending period (but disregarding amounts covered by housing benefit/universal credit). In some instances, the landlord is not awarded any damages as the rent paid by the tenant is higher than the profit made and despite this, the tenant is still receiving money from subletting.
In this matter, we were acting for a housing charity, not a social landlord. This meant they could not rely on the Prevention of Social Housing Fraud Act 2013. We therefore made an application under the common law remedy for unjust enrichment and successfully obtained an order for £18,000.
This is a significant decision for all non-social landlords as it has demonstrated that it is possible to obtain an order against an individual for unjust enrichment relating to money received from subletting, with such award representing the entire profit made and not limited by monies received towards the rent account over the offending period.
Please do contact Hetal Ruparelia if you require any advice on subletting and/or unjust enrichment and unlawful profit orders.
