Sub-letting or share housing

10 May 2021

In this week’s episode of the Talking Tenancies podcast, we discuss the differences between sub-letting and share housing  with Jill Davidson from Customer Experience at the RTA

Transcript

Host - Belinda Heit – Communication and Education – RTA 

Guest – Jill Davidson – Customer Experience – RTA 

Host: Welcome to the Talking Tenancies podcast, brought to you by the Residential Tenancies Authority.  I’m your host, Belinda Heit. Join me as we explore everything you need to know about renting in Queensland, with experts from the RTA and industry. We're here to help make renting work for everyone. 

Sharing a tenancy or a rental property is a popular way to keep living expenses affordable. While this can be in the form of sub-letting or share housing, they can be vastly different to each other and may affect your rights and responsibilities under the legislation.  

Today's expert from the RTA is Jill Davidson from Customer Experience. Welcome Jill. 

Guest: Thank you very much, Belinda. Happy to be here.  

Host:  Now, can you tell us about your role at the RTA and what you're responsible for? 

Guest: Sure. So, I am one of the Team Leaders within the RTA’s Contact Centre. I look after a team of up to—just about to reach the magical 20 mark again.  

Host: Wow. 

Guest: So, they're all amazing, dedicated individuals who anyone may speak to when calling in for an inquiry. Been here for about two-and-a-half years so far but have almost 20 years of experience in contact centres behind me, so really confident to say that we've got one of the best ones here that I’ve ever experienced. 

Host: Yeah, and I've had the honour of sitting on the phones with you and you—you're amazing, can I just say. So, if you get Jill on the phone, make sure you say hi. Now today we're going to be talking about sub-letting and share housing in rental properties. So, what's the difference between sub-letting and share housing? 

Guest: So, tenants in a sub-letting arrangement and tenants in a share house arrangement, so legally very, very different things, sub-tenants and sub-letting. So firstly, I'd say sub-letting is not a term commonly used here in Australia. You kind of see it more on movies, don't you? “Well, that's my sublet”, you know? 

So, when you're in a sub-letting arrangement, you generally have no direct relationship with a rental property manager or owner, and say you deal mostly with a head-tenant who acts as the managing party for that tenancy or property. A head-tenant essentially takes on the same rights and responsibilities as a property manager or owner, so they're the ones in an agreement with the property manager or owner of that place. 

A sub-tenant and the head-tenant will enter into their own agreement with each other, so it's completely separate from the agreement between a property manager and/or owner and the head-tenant. Does that make sense? 

Host: Yep. It's complicated, but yes. 

Guest: It’s hard to get one’s head around. So, it also means that a sub-tenant and head-tenant can take action against each other if, for example, the other party breached the sub-tenancy agreement.  

So, share housing—or a co-tenant situation—so this happens when two or more people are named as tenants on an agreement with a property manager or owner. So, they are co-tenants. All tenants will have direct relationships with the property manager or owner themselves, independently. They can be jointly or individually liable for all the rent, any damages and the full cost of any compensation owed potentially to our property manager or owner if an agreement is breached. 

So, whether occupants are co-tenants or sub-tenants—so it depends on their specific circumstances and what has been agreed upon—so it's important that parties involved discuss all options when considering sharing a tenancy and have written agreements that accurately reflect arrangements made. 

Host: Yeah, so there's—that does make it a lot clearer ‘cause, I mean, if you look at a sub-let, you really only have one person dealing with the actual management of it. And where they're in a share housing or co-tenant situation, they're all part of that management situation. 

Guest: Exactly. 

Host: Just to be concise. Now, how can you tell what tenancy arrangement you’re in? 

Guest: Yeah important. So, your tenancy agreement can provide some clarity—so that's literally the documents that you've signed. Either physical pieces of paper or online, nowadays it's pretty common. So, you need to look at who is named on your documentation as the managing party. So, if other occupants in the rental property are named under the ‘Managing Party’ section, that is an indication that you're likely to be in a sub-letting arrangement. If a real estate agent or the property owner is named as the Managing Party on the agreement, then that's likely to be a co-tenant in a share house situation. 

In any situation, the property manager or owner must give approval for all occupants living on the premises, whether they are sub-letting or transferring their interest in the tenancy. A property manager or owner must also have a good reason, and act reasonably, when refusing a sublet arrangement or a transfer of interest. 

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https://www.rta.qld.gov.au/webinars/know-and-understand-your-agreement

 

Host: And we would hope if you're going into a tenancy arrangement, you would know before entering into it exactly whether you're in one of those situations. 

Guest: Exactly. 

Host: Yeah, so since sub-letting and share housing are quite different, let's tackle sub-letting first. So, what are the rules there? 

Guest: So first and foremost, you know if a tenant wants to sublet a room in the rental property, they must get written permission from the property manager or owner. So, the property manager or owner may request an application or references for their approval and approved occupants should also be listed in the special terms of a tenancy agreement. 

So, remember that when a tenant named on an agreement gives another person the right to rent a part or all of a property, they become the head-tenant and essentially take on the responsibilities of that property manager or owner. So, a head-tenant should provide a sub-tenant with several things. Got some points here, so: a written tenancy agreement, first and foremost, top of the list; an entry condition report, so that's our form 1A or B; the RTA's pocket guide to tenants, houses and units, that's the form 17A—all on the website; receipt for bond money paid. And lodging the monies with the RTA within 10 days—very important. So, any agreement between the head-tenant and sub-tenant should be in writing and it's recommended to include arrangements for sharing bills for gas, electricity, internet. 

Host: Yeah it, getting everything in writing, particularly in these situations, is super important, because that's where it can all go bad, right? 

Guest: Transparency, visibility—everything’s gotta be outlined. Well, ideally yes. 

Host: Yeah. So, what needs to happen with the bond allocation when a tenant sub-lets a room? 

Guest: So, if a head-tenant takes a bond, they will need to provide the sub-tenant with a receipt for that money that's been paid. The head-tenant must also lodge the monies with the RTA within 10 days, just like I mentioned before, just—and that's exactly the same as any managing parties or a real estate agent—same rules apply. 

In a sub-letting situation, usually the sub-tenant and the head-tenant’s bond will be lodged separately. A sub-tenant’s bond record would show them as the bond contributor and the head-tenant as the managing party. So, for example, the head-tenant’s bond sitting with the RTA might show ‘Ray White’, for example, as the managing party, and ‘Joe Blog’ as the tenant. If a new tenant pays bond to the head-tenant, their bond should sit with the RTA with ‘Joe Blog’ as the managing party, and the new sub-tenant, as their tenant, same address, completely separate and unrelated bond numbers. 

Host: Gotcha, OK. So, what about when the approved occupant or sub-tenant would like to leave the tenancy? 

Guest: So, when an approved occupant or sub-tenant would like to leave the tenancy, they should follow the same process with their head-tenant as they would with any managing party or real estate. So, this could involve talking to their head-tenant and giving the appropriate notice. Usual time frames and processes of giving notice or agreeing on an end date by mutual decision will, you know, still apply. If you're unable to resolve a dispute through self-resolution, then the RTA’s dispute resolution may be able to help. 

Host: OK. So, now, for a share house situation—I've been in one of these. All tenants are sharing their responsibilities and they liaise directly with the property manager or owner, but what happens when co-tenants change? And by change, I mean they have different people. 

Guest: Yep, that is just part of that territory. I think I'm one of the only people who's never been in a share house situation. I don't know how I managed to avoid it, but I did.  

Host: Wow, well done. 

Guest: Thank you. So a co-tenant can issue a notice of intention to leave, but the tenancy will not automatically end unless all occupants move out at the same time.  

So, several options when you need to move forward on this one. So, you can keep the current tenancy in place and all parties agree in writing to transfer the leaving tenant’s part of the tenancy to the remaining and/or incoming new tenants; parties can mutually end the current agreement in writing and have a new agreement put in place between the property manager or owner and the remaining tenants and/or incoming ones; the property manager or owner could choose to end the tenancy themselves and issue all the tenants with a notice to leave. So if a leaving tenant doesn't ensure the tenancy has ended correctly, they will remain responsible for the agreement even if they are no longer living in the premises, in the property. 

Host: That's a really important one to know, isn't it? 

Guest: It’s very, very important. Can't—so we'll just expand on it a bit then. An example of this—very common one that we will get daily in the contact centre—relationships do become strained when you're in a share house. 

Host: Oh, I know. 

Guest: So, you know, for example, one co-tenant may move out quite suddenly, sometimes having not followed correct process mentioned before, like giving notice, or paying what rent they may owe. So, this usually leaves tenants who are remaining at the property in a position where they're now responsible for making up lost rent. They can end up out of pocket, behind in the rent. It's important for anyone in a co-tenant or share house arrangement to understand that, despite that particular scenario—very common scenario—it might feel unfair, really unfair, they have, by way of signing the lease, agreed to take responsibility for the full rent if one person stops paying.  

So, in order to protect one’s own rent history, which really should be right up there when starting a tenancy—your rent ledger, your rent history first. So, a person’s primary concern is to keep paying rent in full and on time to the managing party when you're in a share house. So, recouping any unpaid rent from a tenant who has suddenly up and left, for example, it becomes a, you know, a completely civil matter. So outside of the agent, outside of even what the RTA may be able to assist with. The property manager or owner, they're not obligated to assist with it. Doesn't feel like that should be the case, but it actually is. Dispute resolution, as I just mentioned, possibly not suitable when it's this situation between co-tenants. 

The process of co-tenants swapping and changing in relation to keeping track of everyone’s bond contribution—previously, been a little bit clunky. Bit messy. Lots of paperwork, signatures, backwards and forwards, this area that area. Thankfully though, now we have a Change of Bond Contributors Web Service that helps with this process online. Really recommend that you check it out and give that a go first if you need to. It’s on the website, it's very easy to use. 

Host: Yeah, it just makes that process so much easier and, my goodness, you must have so many calls to deal with this scenario every day. 

Guest: Absolutely. Pretty sure that property managers and owners are big fans of that particular one. That little form is a difficult one to fill out when it's on paper, but online it's a much simpler process for co-tenants. 

Host: Much easier, yeah. Well thanks so much Jill for helping us to get a greater understanding of sub-letting and share housing. 

Guest: My pleasure. 

Host: Now it's very common for people entering into either a sub-tenant or share house situation to be young and/or new to the rental market. I can't stress enough the benefits of doing your research before signing any agreement. Look at our website rta.qld.gov.au, call our team, ask questions of the people you may be considering living with, and understand your rights and responsibilities.  

Thank you for listening to the Talking Tenancies podcast. For more information about the Residential Tenancies Authority visit rta.qld.gov.au

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