As a Landlord, you would agree with us that it is worth keeping things as simple as possible with the leasing of your investment property.
There are situations however that commonly arise such as shared tenancies and requested changes to these that can make things not so straight forward.
If you as landlord or your agent don’t handle such requests correctly, it can become a significant problem for you and may likely end up with the NCAT contacting you!
Here I address some of the top facts for your rights as a Landlord when there is a requested change in a shared tenancy.
A common scenario may be when your existing tenant requests to share the home they are renting from you, to help meet their rental costs.
Your tenant has a right to ask this and there are a few ways that extending the tenancy agreement to more tenants or assigning/transferring to new tenants can be setup. The tenant could share the rental home with another person as a:
- sub-tenant, (where your tenant becomes the head tenant) or
- boarder or lodger
NSW legislation states that at least one of the original tenants must remain on the tenancy agreement (if it is to remain a ‘change to an existing shared tenancy’) and the tenant must seek written consent from you as landlord to add a co-tenant or sub-tenant.
You must not unreasonably withhold consent, if you do the tenant can apply to the NSW Civil and Administrative Tribunal (NCAT) for an order that allows the transfer or sub-letting. The NCAT will then decide if the landlord’s withholding consent is unreasonable. There are specific grounds that may allow you as landlord to withhold consent. See Factsheet here on Transfer and sub-letting for more information.
Whether the shared tenancy is setup as co-tenants or with sub-tenancy, it creates different obligations and processes that must be adhered to by your tenants. Let’s look at the different arrangements:
Your original tenant and the names of other tenant/s that are moving with your consent are on the tenancy agreement for your property. Your tenant is effectively assigning the lease to another/other tenants also. The tenants share rights and obligations of the tenancy agreement evenly. A typical scenario for this would be when a tenant decides to take their relationship to the next level and move in together.
Your original tenant’s name is on the tenancy agreement for your property and with your consent this tenant has sub-let part of the premises to another resident under a separate written agreement. That person (your tenant) is the head-tenant. The sub-tenant has the rights and obligations of a tenant in relation to the head-tenant who are affectively acting as their landlord. Your tenant is responsible for the sub-tenant’s actions within your property.
Boarder or Lodger:
This arrangement doesn’t require changes to the tenancy agreement – your tenant/s continue to remain responsible for their obligations of the tenancy agreement.
This scenario is when your tenant agrees to allow an additional occupant to stay with them in your property that they are renting – for either a short or long-term stay. Exclusive use or possession of part of your property is not allowed in this arrangement – even if the boarder is paying your tenant rent. Your tenant does not need to seek your consent to have boarder/s provided they do not exceed the maximum number of occupants stated on the lease agreement.
Now this might sound like you as the landlords have little control over who is living within your property however there are some ‘reasonable refusals’ that you as a landlord have the right to use, these are:
- if the total number of occupants permitted under the lease would be exceeded
- if the total number of occupants would exceed any local council rules and regulations
- if the person being proposed is listed on a tenancy database
- if they reasonably believe it would result in the premises being overcrowded.
This is not an exhaustive list. There may be other situations where it would be reasonable to decline your request, we have happy to assist, simply contact us.
Does a change in shared tenancy cost you as the landlord?
Any reasonable expenses incurred could be passed on to your tenant however you cannot charge your tenant or increase the rent of your property if your tenant requests a change to shared tenancy. Most situations of a change in shared tenancy don’t incur any cost.
If you receive a request from your tenant to assign the existing lease to new co-tenants and/or transfer the tenancy agreement completely to new tenant/s then your first steps will be:
- Speak with your agent about your rights and rules of how this process must be conducted
- A good Property Manager will have example forms you can use for abiding by ‘written consent’ and assisting the tenant in setting up their written agreements with sub-tenants
- When considering your decision to consent to new co-tenant/s or sub-tenant/s visit http://www.fairtrading.nsw.gov.au/ for information on what defines ‘reasonable withholding of consent’
There are additional resources below to assist with knowing your rights and obligations as a landlord when your tenant requests to change a shared tenancy (setup or amend a shared housing arrangement)
- To view or download the Change of Shared Tenancy Agreement form, click here.
- NSW Civil and Administrative Tribunal (NCAT) Application Form and Factsheets – NCAT application form and factsheets on NCAT hearing. Available for download at http://www.ncat.nsw.gov.au/
- Tenants NSW Factsheets and Sample Letters – Factsheets on various tenancy issues, plus sample letters. Available for download at www.tenants.org.au
- NSW Fair Trading: Factsheets on starting a tenancy, problems during a tenancy and ending a tenancy, as well as the Residential Tenancies Act 2010, Residential Tenancy Agreement and all Renting Services forms. Available for download at www.fairtrading.nsw.gov.au
- Residential Tenancies Act and Regulations: The provisions of the Act and Regulations can be found online: www.legislation.nsw.gov.auwww.austlii.edu.au