While many landlords prefer to deal with just one tenant, in some cases having multiple tenants or co-tenants can be financially advantageous. There’s also the case of tenants requesting to sublet and the rules around that.
As a landlord, it’s important that you understand how these arrangements work and what to consider so that you make informed decisions about your property.
Let’s explore the idea of co-tenancy first.
A co-tenancy is when there are two or more tenants listed on the original tenancy agreement with the landlord. In effect, all parties are equally liable in that agreement. Often this arrangement means the property is divided up between the tenants and you can expect the total rent to be higher.
So how many co-tenants can you have? While there aren’t clear cut rules around the number of people you can have in a property, here are some guidelines.
1. One couple per room
The general idea is that there should be no more than one couple per room. That is to say that in a house of 3 rooms, there shouldn’t be more than 6 people on the tenancy agreement. The rationale for this is to avoid overcrowding and to ensure that everyone has a safe and comfortable amount of living space.There is an exception when it comes to children as often, more of them can fit into the one room.
Also, take into consideration the type of property it is ie. apartments have a restriction on the number of people due to it being a hazard in a fire or emergency.
2. More people, more work
The more people you have using your property, the higher the risk of wear and tear. Fixed items like your carpets, flooring, stoves will be getting more use for sure. So while it may be tempting to accommodate a higher number of tenants to fetch better rent, you will need to factor in the maintenance issues that will be incurred as a result.
It’s also true that the more people on the agreement, the more work you will have to do. There will be more people to manage when it comes to rental, bills and general upkeep of the home.
3. Chances of disputes
In a co-tenancy agreement, each tenant is equally responsible for the property. This includes ensuring that rent is paid up on time and that the unit is well looked after. While it all looks fine on paper, there is a chance of disputes between the tenants. In some cases, this could result in late rent, unruly behaviour and neglect of the property.
There’s also the case of sub-letting. What is the difference and what are the rules around this arrangement?
Sub-letting happens when the main tenant on the tenancy agreement rents out part of the property to one or more persons. This is different from a co-tenancy or a multiple tenancy agreement as the newer occupant will not have their name on the original agreement. This means that the main tenant continues to take full legal responsibility.
Here are some terms around sub-letting in Victoria.
1. Requires landlord’s permission
While the head tenant may have found someone to take over part or all of their lease, they are still required to get permission from the landlord. Landlords should not withhold consent if the request is reasonable. However, there may be some cases in which it may be wise to refuse consent. This includes for reasons such as overcrowding, or if the new tenant has a bad rental history.
Be advised that your tenant may still be able to apply to your state civil and administrative tribunal for an order to approve the sub-letting arrangement. Also, should tenants sublet without permission, landlords may give a 14 day Notice to Vacate and apply to have the tenants evicted.
2. Record of agreement
It’s also worthwhile requiring that the head and sub-tenants draft out an agreement in black and white. Do include their share of the rent, duties and responsibilities. Having some rules in place will ensure clarity and help prevent disputes.
3. Lodge Bond
Once the landlord has approved, the bond needs to be lodged reflecting the new arrangement. In Victoria, the head tenant is responsible and will need to notify Residential Tenancy Bond Authority (RTBA) of the changes.
These are some general guidelines when it comes to understanding how co-tenancy and subletting works. As mentioned, it’s essential for landlords to know the benefits, risks, rights and responsibilities involved so that they can make the right decision for their property.
However, if you’d like to know more, especially with regards to your specific situation, do speak to one of our agents today.