Pros and Cons of Allowing Tenants to Sublease
What Landlords Need to Know
If you’re a landlord leasing a rental to a tenant, it’s important to be crystal clear about what you do and do not allow in the lease, such as whether or not your tenant can sublease the apartment. Here’s more about subleasing to help you decide if it’s right for your rental.
What Does It Mean to Sublease?
Subleasing is when a tenant rents out their current rental to another tenant. Depending on how the sublease is created, the subtenant could pay all or a portion of the rent, and may assume all liability.
If the liability remains with the original tenants, they are responsible if the subtenant stops paying rent, damages the unit, or otherwise breaches the lease agreement.
Factors such as rent control may impact your ability to sublease, and the rent you charge a subtenant. It will vary by property and location, though renters living in Section 8 housing may not sublease.
Types of Subleases
There are two types of subleases.
The tenant plans to return to the rental after a brief, temporary absence, such as an overseas work assignment or a family medical issue. The new subtenant subleases the property for however long is necessary.
The tenant is moving away permanently, and finds a renter to sublease the unit for the lease's remainder. If the subtenant acts as the new primary tenant, this is known as an “assigned lease” or “assignment,” and may not be done without the landlord’s consent.
If the subleasing tenant doesn’t have any direct contact with the landlord, and usually pay rent to the original tenant, who also deals with the subtenant’s complaints or issues, and typically requests any necessary repairs from the landlord.
Pros and Cons for Landlords
Tenant finds the subletter
Tenant is possibly responsible for subtenant
Inconsistent screening procedures
Subtenant may not be reliable
Lease violations or eviction
Sublet Pros for Landlords
- No vacancy. A tenant moving away from the rental mid-lease may break their lease, if you don’t allow an apartment sublet. Allowing a sublease means possibly avoiding a rental vacancy and lost rental income.
- Tenant finds the subletter. With a sublease, the original renter is responsible for finding someone to take over the original lease. The landlord doesn’t have to deal with the time and hassle of finding a tenant.
- Tenant is possibly responsible for subtenant. The original tenant isn’t the one currently living in the rental, but they signed the actual lease agreement. So, depending on the subleasing agreement, they may be responsible if the subtenant stops paying rent, damages the property, or otherwise causes issues at the rental. This could mean less work for you as the landlord.
Sublet Cons for Landlords
- Inconsistent screening procedures. If you don't require that all subtenants must be screened by the landlord, you’ll have no idea about the caliber of tenant subleasing your property. The original tenant may find someone to cover the rent, and less concerned with a subtenant’s qualifications.
- Subtenant may not be reliable. If the original tenant is responsible for the subtenant, tracking down the original tenant for late rent payments may be difficult. It's risky to rely on the original tenant to relay complaints or repairs.
- Property damage. As a short-term renter, a subtenant may cause rental damage because they may be unaware of the rules.
- Lease violations or eviction. The subtenant could violate the original lease in other ways, such as creating too much noise or by having a pet when you have a no-pet policy. Nonpayment or other lease violations may result in subtenant and original tenant eviction. As well, in some states or cities, your original tenant can evict the subtenant.
Sublease Terms in Lease Agreements
Consider including rental sublease terms in your original lease agreement, so your tenant understands what’s expected if or when subleasing occurs. The terms may better your chances of a quality tenant subletting the property, and help avoid potential risks. Here are a few possible terms to consider.
- No sublets without the landlord’s consent or written permission. Require your consent before subleasing or written notice of any desire to sublet. This notice should include the reason for subleasing, length of the sublease, and information about the tenant taking over the rental, including credit, income, and rental history.
- The landlord must screen and approve all subtenants. Require the same prospective tenant screening procedures across the board, such as a credit check, background check, and employment verification.
- Outline sublease logistics. This might include the time frame, end date, deposit, cleaning, and move-out instructions.
- Require renters insurance. Ensure the subtenant has insurance, or that your tenant’s renter's insurance covers the subtenant’s damages or losses.
- Rent must be paid to the landlord. State that rent collected from the subtenant is paid to the landlord, to help deter the original tenant from charging the subtenant a higher rent amount and pocketing the difference.
- Ban short-term sublets. Renters may be interested in subleasing their space on sites like Airbnb or VRBO. If you’re not comfortable with this, explicitly ban this type of short-term rental in the lease agreement to help avoid misunderstandings.
Important: In some states and cities, landlords cannot refuse a written request to sublet except in certain circumstances or with a list of approved reasons. Check your state and city rental laws.
The Bottom Line
Subleasing has pros and cons for both tenants and landlords. Through a clear lease agreement, you may be able to have your tenant sublease the space in a way that you’re comfortable with. It may also ensure that rent is paid every month and that your rental is never empty.