Can A Tenant Rent Out The Property?  

Many tenants nowadays are looking for solutions to loosen the financial grip of the rising rent prices and the soaring cost of living. This led to a growing curiosity about subletting in Australia, with both renters and rental providers wondering, can a tenant rent out the property?

While the majority of tenants and landlords have a good understanding of the conventional residential tenancy agreement, the same can’t be said about sublease agreements. 

Of course, tenants can hire real estate agents to do their bidding just as landlords can leave handling lease agreements to their property manager, but it’s best to be familiar with this sort of shared arrangement as its popularity shoots up by the day.

Today’s guide aims to help all parties get a better idea of what it means to sublet. We’ll address the laws covering such agreements and the steps involved in the process, along with the responsibilities and concerns you should consider whether you’re a tenant or a landlord.

Is It Possible for a Tenant To Rent Out the Property?

Whether you’re currently a tenant or planning to become one, or whether you’re a new landlord or a seasoned one, it can be tricky to keep track of what a tenant can and can’t do with a rental property.

When it comes to renting out the property, the tenant can do so under a shared arrangement known as subletting. 

What Is Subletting?

Subletting is a shared rental arrangement where a tenant of a rental property rents out part or all of the said property to another person. The tenant has to be a party in a current residential rental agreement and the other person renting has to be staying in the property for commercial purposes.

Examples of situations that fall under the category of subletting agreements include a tenant renting out a room for a short-term stay as in the case of Airbnb accommodation. If the tenant is renting out to a person who’ll be taking over their tenancy, it can also qualify as subletting.

In a subletting arrangement, the original tenant remains the tenant of the landlord and also becomes the head tenant of the new subtenant. 

As such, the original tenant, which is also the head tenant, is still legally responsible for upholding all the conditions already agreed upon in their direct tenancy agreement. 

The head tenant also becomes responsible for the actions of the new subtenant, collecting monthly or weekly rent, informing the rental provider about repairs, and keeping the property in clean condition.

What Does a Sublease Mean?

A sublease is a term that refers to the legal document that depicts the details of the subletting agreement. It’s the contract that the original/head tenant shares with the subtenant.

You can think of a sublease as a secondary lease or tenancy agreement. In a sublease, the original tenant is known as the sublessor and the subtenant is called the sublessee.

Is It Legal To Sublet in Australia?

Yes, it’s generally legal for a tenant in Australia to rent out part or all of the rental property to another person. The laws and regulations governing subletting are quite uniform across the country, with only a few minor variations between different states and territories.

How Does Subletting Work?

Knowing that the subletting legislation is pretty uniform throughout Australia, let’s talk about the general rules surrounding the process.

Obtaining Approval from the Rental Provider

The first and most crucial rule to follow for establishing a subletting agreement is to get permission from the landlord. 

A tenant can’t just rent out part or all of the property by simply deciding to bring in another renter, the property owner or manager must provide approval.

The consent from the rental provider must be in written format, and without one, subletting becomes a breach of the rental agreement.

For more practical consent topics, read ahead on if tenants can remove plants.

Can a Property Owner or Manager Refuse To Provide Consent?

A landlord or property manager can’t decline requests for subletting the property without a reasonable argument. This means that while the rental provider can refuse to give permission, they have to give a sound reason for the disapproval.

One of the reasonable grounds for refusal is when the total number of occupants would be more than what’s specified in the rental agreement. Similarly, if the total number of occupants would be more than the limits set by local regulations.

A rental provider can also say no to a tenant’s sublet request if they genuinely believe it would result in overcrowding within the property. Another reason is if the proposed subtenant is already registered on a tenancy database.

If a tenant thinks that the landlord’s justification for declining their subletting request is unreasonable, they can turn to the Tribunal and apply for a case hearing.

Does the Tenant Pay an Approval Fee?

No, the tenant shouldn’t pay the property owner or manager to get them to provide permission for subletting.

Completing the Paperwork

After obtaining written consent from the landlord or their agent, the next rule is to draw up a written agreement between the head tenant and the subtenant – a sublease as we explained above.

Depending on the state and territory, tenants’ unions offer standard contracts online to facilitate the process.

The head tenant may also need to fill out a bond lodgement form. This document is due if the sublessor takes bond money from the sublessee, and it’s the former’s responsibility to lodge it with the relevant bond authority of the state.

What Happens If the Subtenant Leaves?

If the subtenant wants to leave the sublet property, the original tenant remains responsible for fulfilling all the conditions of the tenancy rental agreement.

Conclusion

As you can tell by now, a tenant can rent out part or all of the rental property. However, to make the subletting agreement legal, the rental provider must provide written permission for the original tenant to become a head tenant and bring in a subtenant.