With the rising popularity of short-term rental platforms like Airbnb, HomeToGo, and VRBO, many tenants are tempted to sublet their rental units without informing their landlords. While subletting may be permitted by the property owner, it carries a lot of risks. Before deciding if you should allow your tenant to have a “tenant” of their own, here’s everything you need to know about subletting:
What is subletting?
A sublet or a sublease is an arrangement wherein one tenant rents out the property that they are currently renting to another tenant. In a sublease, the original tenant is called the ‘sublessor’ while the new tenant is the ‘sublessee’.
Subletting is different from sharing the property with a roommate. In subletting, only the original tenant’s name needs to be registered under the lease agreement. On the other hand, with roommates, every tenant should be named in the lease.
Why do tenants sublet the property?
Tenants may want to sublet the rental property for several reasons, but the most common reason is to make money. When tenants find themselves struggling to meet their monthly rental payments, the easiest solution would be to take on a sublessee. Subletting can help the original tenant pay their bills.
However, the reasons aren’t always financial. Sometimes, tenants simply want company. This is especially true for tenants who aren’t used to living alone, or who feel uncomfortable being by themselves.
What are the types of subleases?
#1 Short-term sublease
A short-term sublease is common among tenants who plan on being temporarily absent from the rental property. Subletting allows tenants to keep the property occupied for a fixed period of time while saving money in the process.
#2 Permanent sublease
A permanent sublease occurs when an existing tenant is moving away and needs someone to sublease the rental property for the remainder of the lease agreement. The sublessee pays rent to the original tenant who is responsible for requesting repairs, relaying complaints, etc. to the landlord or property management company.
What are the advantages of subletting?
#1 Prevents vacancies
When a tenant plans to move away, it means that they will have to terminate their lease early. As a result, you will lose rental income and you will have to start from square one. Allowing a tenant to sublease the property prevents vacancies and reduces turnover.
#2 Eliminates the hassle of tenant screening
Under a sublease, the original tenant is responsible for selecting a sublessee who can take over their lease. The landlord doesn’t have to spend time and energy looking for a suitable tenant.
#3 Puts the responsibility on the original tenant
Even though the original tenant isn’t residing in the rental property, it’s still their name that is written in the lease agreement. This means that the original tenant is responsible for their sublessee. If their sublessee fails to pay rent, damages the property, or causes other issues, the original tenant is the one that’s accountable.
What are the disadvantages of subletting?
#1 Allows unqualified tenants into the property
Unless you require all sublessees to be screened by your property manager, you risk allowing unqualified sublessees into your property. Chances are, your tenant will be less concerned with qualifications and more concerned with finding anyone who can take over their lease. Therefore you should deal with multiple tenant leases yourself rather than giving the sublease authority to your tenants.
#2 Increases the risk of late rent payments
Although the original tenant is responsible for the sublessee, there is still no guarantee that the sublessee will pay their rent on time. You may also have difficulty getting in touch with the original tenant when problems with their sublessee arise.
#3 Increases the risk of damage and other problems
You shouldn’t count on your tenant to give the sublessee a rundown on the rules concerning the rental property. A sublessee may unknowingly destroy the property, disturb the peace within the community, or annoy his/her neighbors.
Should you allow your tenant to sublet the property?
Ultimately, this is your decision to make. Subletting is acceptable especially if you need to keep your rental property occupied. But, if finding replacement tenants is a breeze and you want to avoid the trouble of subletting, then you might want to take a pass. There are no laws that require you to allow or to prohibit subletting, so you can take whichever route.
What you shouldn’t allow are tenants who sublease without notice. Once a tenant sublets the rental property without obtaining your permission, they commit illegal subletting. When this happens, they violate the terms of their lease agreement, which means that they can be evicted.
What should you do if you want to allow subletting?
Consider adding terms and conditions in your lease agreement that specifically address subletting, such as:
- Requiring permission from the landlord. The original tenant must obtain consent from the landlord before subletting the property. They should provide their reasons for subletting, duration of the sublease, as well as information about the sublessee.
- Approval of sublessees by the landlord. Require the original tenant to subject the prospective sublessee to your property management firm’s screening procedures. This may include checking their rental history, verifying their employment status, reviewing their credit score, and so on.
- Renters insurance. Consider requiring the sublessee to obtain renter’s insurance. This covers the costs for injuries, damages, and so on.
- Arrangements for rental payments. You may require the sublessee to pay directly to you, as this takes away the opportunity for the original tenant to lie about the rent amount and pocket the difference.
- Kinds of sublets allowed. If you’re uncomfortable with short-term subleases, you may explicitly state this in the lease agreement. Subleasing on platforms like Airbnb and VRBO carries safety concerns.
Subletting can result in unfavorable consequences such as property damage, late rent payments, etc. but there are ways to prevent these subletting nightmares from happening. If you do decide to allow subletting, the best practice would be to include every possible clause in the lease agreement. This protects you and your investment property should the sublessee turn out to be a bad apple.
The property managers at Luxury Property Care can ensure that your rights as a landlord are protected and that your real estate investment is well-taken care of. Find out how we can help you by calling (561) 944 – 2992 or by completing our contact form online. We manage rental properties within South Florida.