Lease transfers and subletting

Assignment is the legal term for when a tenant transfers their whole interest in a rental property to another person. For example, if a tenant signed a 12-month tenancy agreement (lease) but decided to leave after 6 months, they could get another person to move in and take over their lease. The new tenant would take the place of the original tenant, paying rent directly to the landlord, and having all the rights and responsibilities of the original tenant.

You can assign your interest in a tenancy agreement if you are a sole tenant or a co-tenant. However, before assigning your interest in the lease to someone else, you must get the landlord’s consent (see: Your right to assign or sublet). If you are the outgoing tenant you need to make sure this assignment is done properly so that you cannot be held liable for problems that may arise after you have left the tenancy. To arrange the assignment of a lease you can: Prepare an assignment in writing. This should be signed by all the parties – the outgoing tenant(s), the incoming tenant(s) and the landlord (or their agent) OR Change the names on the existing tenancy agreement. Any changes should also be signed or initialled by all the parties

If you are assigning your interest in a tenancy agreement and paid all or part of the bond, then both you and the incoming tenant(s) must notify the Residential Tenancies Bond Authority (RTBA) by completing a Tenant transfer form, from the landlord or RTBA online.

Subletting is when a tenant transfers part (but not all) of their interest under a tenancy agreement to another person but the original tenancy agreement with the landlord continues. The first tenant is called the head-tenant and the second tenant is called the sub-tenant. The agreement between them is called a sub-lease.

If you want to sublet a rental property, you must first get the landlord’s written consent. If you are thinking of becoming a sub-tenant, you should ask to see written consent from the landlord to the head-tenant.
A sublet may be for part or the whole of the premises. The period of the sub-tenant’s agreement with the head-tenant cannot be longer than the head-tenant’s lease with their landlord. The head-tenant may or may not live in the property at the same time as the subtenant. If the head-tenant lives at the premises, in order for there to be a valid sub-lease it must be very clear that the sub-tenant has ‘exclusive possession’ of at least part of the premises. . Examples of a subletting situation are:

• when the head-tenant, who is renting a property from the owner on either a fixed-term or periodic lease, leases out a room or rooms for the ‘exclusive possession’ of another person
• when the head-tenant, who has a 12-month lease, leases the property to another person for 2 months while they are on an overseas trip.

The head-tenant is considered to have made another tenancy agreement with the sub-tenant, while still keeping their original agreement with the landlord. The relationship between the head-tenant and the sub-tenant is the same as that between a landlord and tenant, and all the same rights and responsibilities apply. For example, the sub-tenant would tell the head-tenant of any repairs needed to the property, and could make a compensation claim against the head-tenant if those repairs weren’t made and the sub-tenant suffered a financial loss as a result.

You cannot assign or sublet without the landlord’s written consent. However, the landlord cannot unreasonably withhold their consent. If they do, you can apply to the Tribunal for an order that the consent of the landlord is not required. A landlord or agent cannot charge a fee for consenting to an assignment or sublease. However they can charge a fee for the preparation of a written assignment of a tenancy agreement. If you assign or sublet without consent, the landlord can give you a 14-day Notice to Vacate and apply to the Tribunal to have you evicted. If you receive a Notice to Vacate you should contact us for advice.

In some situations it may better to end your tenancy rather than assign or sublet.

Just because a person is sharing part of a house or flat with another person, it does not necessarily mean that they have a subletting arrangement. There is often confusion about whether a tenant is a sub-tenant, a co-tenant or a licensee. Co-tenants are all parties to the one tenancy agreement or lease together, with equal rights and one landlord. On the other hand, circumstances that may indicate a subletting situation are:

• one tenant signed a written tenancy agreement with the landlord and the other did not
• one tenant moved in before the other and the later tenant paid bond to the first tenant
• one tenant collects the rent from the other and pays it to the landlord
• one tenant is responsible for all dealings with the landlord (eg repair requests, giving notices).

None of these circumstances alone will prove that there is a subletting arrangement, as the legal situation depends on the facts in each individual case. While it is not always clear when a subletting arrangement exists, the difference between a sub-lease and a co-tenancy can be important if a dispute arises between yourself and another tenant. Legally speaking, to be a tenant you must have ‘exclusive possession’ of all or part of the rented property. This means that if you move into an existing household, you may be regarded simply as a licensee, with no tenancy rights. If you share a house with the landlord, you are presumed to be a licensee.

If you rent a room and the door is lockable or you rent a discrete part of the rented property, you may be regarded as a tenant, which means that you do have tenancy rights.

Licensees can sometimes have their disputes heard under the Australian Consumer Law and Fair Trading Act 2012 (Vic) in the Civil Claims List at the Tribunal, but they do not have the same rights that tenants have under the Residential Tenancies Act 1997. A dispute between a head-tenant and a subtenant can be taken to the Victorian Civil and Administrative Tribunal, and the Residential Tenancies Act 1997 applies. However, the Tribunal cannot deal with disputes between co-tenants (see below.)

Getting advice about a co-tenancy

We don’t give advice on co-tenant disputes. But you can find some information for co-tenants on our Shared households page. Both parties to the dispute must agree to go to mediation. If you need legal advice you can contact the Federation of Community Legal Centres on 9652 1500 and they can refer you to a legal centre in your area. Community Legal Centres provide free legal advice to eligible clients (however not all legal centres are able to advise on tenancy matters).

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