Most landlords understand how a residential tenancy agreement works, but sub-letting can be a bit of a grey area.
Here’s what landlords need to know about this arrangement when it concerns their rental property.
The definition of sub-letting
Sub-letting is an arrangement where a tenant leases out a room or space to someone who isn’t listed on the lease – and while it’s legal in Australia, the landlord must give their permission.
Meldon D’Cruz, principal at Cruz Legal in Melbourne, said when a tenant signs a lease, they enter into a contractual relationship with the landlord through a tenancy agreement, usually managed by a real estate agency.
“Sub-letting occurs when that tenant transfers part, but not all, of their legal interest under the tenancy agreement to another person, like a legal interest in a room or part of the residence, but the original tenancy agreement with the landlord continues, so the first tenant has the legal responsibilities, such as paying rent,” he said.
Mr D’Cruz said residential tenancy laws are similar in most states and territories, but some give landlords “reasonable rights” to object to sub-letting – for example, if a proposed sub-tenant has a bad rental history.
“In New South Wales, a landlord can object if they reasonably believe the premises will become overcrowded; if a planning law would prohibit too many tenants in the premises, because of a lack of car parking, for example; if there is a negative finding on a tenancy database or; if the proposed sub-tenant cannot demonstrate an ability to pay rent,” he said.
The rules of sub-letting
With a few minor differences, the rules around sub-letting are pretty uniform across Australian states and territories.
1. Seek permission
While many people think being able to sub-let a room in a rented property is a “given”, the landlord must give their permission. That means the number one rule of sub-letting is that the original tenant – known as the head tenant – must get the landlord’s permission for the new tenant, referred to as a sub-tenant.
Mr D’Cruz said a landlord can’t “unreasonably withhold” consent and if they do, most states and territories provide a mechanism to apply to the civil and administrative tribunal for an order to approve the sub-letting. Also, a landlord or agent can’t charge a fee for consenting to a sub-lease.
2. Document the arrangement
Generally speaking, the agreement between the head tenant and sub-tenant should be in writing.
Tenants’ unions in different states and territories – like the Tenants’ Union of New South Wales – have sample agreements available on their websites.
3. Lodge a bond
Sometimes a bond will be lodged when a sub-let begins. If the landlord gives permission for the sub-let and the head tenant takes a bond from the sub-tenant, it’s the head tenant’s responsibility to lodge it with the relevant state body.
4. Understand the sub-tenant’s responsibilities
Once an agreement is in place, a sub-tenant has similar obligations to that of the head tenant, Mr D’Cruz said. For example, an obligation to pay rent and keep the place clean and tidy.
Get further information
“If you are considering sub-letting to another person, or may be a sub-tenant, then contact your state’s residential tenancies authority or tenant’s union for more information and a fact sheet on what you need to do for the state where you live,” Mr D’Cruz said.
Here’s what you need to know for each state and territory:
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