What is subletting?
Subletting is when a tenant who occupies a property and whose name is on the lease, rents a portion or the entire property to another.
The subtenant pays rent to the original tenant, however is not responsible for all terms of the original lease with the landlord.
What are the risks of subletting?
For landlords, tenants that are subletting a room in a rented house or even subletting the entire property comes with many concerns.
Not only is it a concern from a financial point of view, with possible property or fixture damage, but your landlord insurance will likely be void as a result also.
Unwanted subletting could also result in your property being used for illegal purposes – which could put you in a very difficult position having to prove it was not with your consent.
You also may face hefty fines (of up to $200,000) for not getting council approval for your property being listed online for short-stay accommodation.
Is subletting through Airbnb & other avenues illegal?
With AirBnB taking the world by storm and changing the short term and holiday rental market, the Residential Tenancies Act was amended mid-2017 to restrict subletting.
Here’s what Benchmark does to prevent illegal subletting:
Dig Deep with Application Processing
Our tenant application process is thorough. We ask previous rental agencies how many people were on the lease and we ensure that prospective tenants have the income to support the rental payments
Clause Added to Lease Agreements
We add clauses to our lease agreements that ensure the landlord is covered legally, and that tenants understand subletting is not acceptable in the property and is a breach of the lease contract.
For example, a subletting agreement may include wording such as:
- The tenant shall not assign this lease to another name without informing Benchmark Specialist Property Managers.
- The tenant is forbidden from sharing the premises through services such as Airbnb, Gumtree etc.
- The tenant agrees not to list the property as being available for subletting, rental or other.
Look For Clues
We ensure that the property doesn’t start to look more like a ‘guest house”. For example, during inspections red flags may be brochures of local tourist attractions, strategically placed towels, guest soaps, fresh flowers, coffee and tea etc. While none of these things would raise alarm normally, combined they may start to tell a story.
Ask the Neighbours
Aside from the security concerns and noise, it is likely the neighbours will not be keen on people coming and going at all hours, so they will be the first to tell you if they think something suspicious is going on. Give them your number so they can let you know when it happens again.
Monitor the Web
As we are constantly doing comparative market analysis for our clients, all properties advertised are monitored, and we ensure a Google Alert is set up on the address to let us know if it suddenly pops up on the internet.
We also complete manual searches which includes searching the address, property name, description and images.
How Benchmark Stops Illegal Subletting
Once we have established that there has been a breach of the subletting agreement and clause in the contract, we issue an official warning to the tenant.
The tenant must remove all online or offline advertisements for the property, cancel any short-term bookings made and cease all activities to do with subletting a room or the entire property.
We will closely monitor online activity and the property itself for a period after this has happened to ensure continued compliance.
If there is non-compliance the tenant shall be found in breach of contract and will be given notice to vacate the property within 21 days.
We immediately start the process to find a replacement tenant and the current tenant must accommodate home opens or inspections required to fill the vacancy.
A Good Property Manager Saves You the Hassle
All of this is handled quickly and efficiently within our internal systems and processes and we can have illegal subletting matters identified and resolved in a timely manner.
So let us worry about your tenants for you! If you want further advice about how you can avoid choosing the wrong tenants for your Perth property, contact our experienced team today and see how we can help you!