Subletting has become an increasingly popular practice in South Africa, driven partly by the rising cost of living. Whether you want to offset your rent or need a solution when relocating for work, subletting can be a financial lifeline. However, it has its challenges and legal considerations. This article will explore the concept of subletting, and its legality, and provide essential tips for those considering this arrangement.
How do you define sublet?
The subletting definition is when tenants rent out all or part of a property they’re currently leasing to a third party. This third party, known as the subtenant, pays rent to the original tenant rather than directly to the landlord.
Is Subletting Legal?
The legality of subletting in South Africa is a nuanced issue. Under South African common law, a tenant has the right to sublet a property unless the primary lease agreement explicitly states otherwise. As this can cause issues for landlords (ask me), many leases include clauses that prohibit subletting. If this is the case, you will need the landlord’s explicit permission. However, even if such a clause exists, it doesn’t prevent the tenant from allowing another person to occupy the premises without payment, as supported by the case of Estate Ishmail v Sayed, 1965.
If subletting is allowed, you may need to sign a separate sublease rental contract.
Sectional Title and Subletting
Body corporates can allow, prohibit, or limit subleasing and short term rentals such as Airbnb. The decision should be written into the house rules.
To change the house rules, an annual general meeting (AGM) or a special general meeting (SGM) vote should take place.
In sectional title schemes, subtenants must comply with the same conduct rules as other occupants.
The Lease and Sublease Agreements
When subleasing, there is a primary agreement between the landlord and the tenant. It remains in effect during the sublease period, and the tenant retains all obligations under this agreement. When the tenant decides to sublet, a sublease agreement should be signed. Its validity depends on the primary lease and will terminate if the primary lease ends or is cancelled.
It’s important to note that there’s no direct contractual relationship between the primary landlord and the subtenant. However, the primary lease may stipulate certain requirements for the sublease, such as tenant vetting processes.
Estate Ishmail v Sayed: Redefining Subletting Rights in South Africa
The current common law is based on the landmark case of Estate Ishmail v Sayed [1965] 1 All SA 512 (C). The South African court held that a tenant’s right to sublet a property is recognised under common law unless explicitly prohibited by the primary lease agreement. This case established that subletting without payment does not constitute a breach of the lease, allowing a tenant to permit another person to occupy the premises without the landlord’s consent if no rent is involved.
The court clarified that two distinct lease agreements are created in subletting scenarios:
- The original lease between the landlord and the tenant
- The sublease between the tenant and the sub-lessee
Key points from the ruling:
- The primary lease remains in force during the sublease
- The sublease terminates if the primary lease ends or is cancelled
- There is no direct contractual relationship between the landlord and the sub-lessee
Sublease Sublet Considerations
While a landlord cannot unreasonably withhold consent, proceeding without necessary approval could put you in breach of your primary lease.
When deciding to sublet, it is recommended to have an explicit agreement. Include specifics about rental amounts, utility payments, move-in dates, deposits, occupancy limits, vehicle allowances, and pet policies.
The original lease terms and if applicable, the house rules should be included. Terms such as maintenance requirements and paying of electricity/water bills.
Remember, you can’t grant your subtenant more rights than you have under your original lease.
Responsibilities and Liabilities
As the original tenant, you remain responsible to your landlord, even when subletting:
- Property Damage: You’re liable for any damage caused by your subtenants, though you can include clauses in the sublease to hold them accountable.
- Rent Payments: If your subtenant fails to pay rent, you’re still obligated to pay your landlord.
- Evictions: Evicting a non-paying subtenant can be a lengthy and challenging process, potentially leaving you liable for lost revenue.
Protecting Yourself When Subletting
How do you find good tenants for rental property? Do proper due diligence. Thoroughly vet potential subtenants by obtaining proof of monthly income, performing a credit check collecting a sufficient deposit, contacting previous landlords for references and checking the TPN credit bureau database.
As with a primary lease, take detailed photographs of the property and fixtures before the subtenant moves in to have proof of its condition.
Conclusion
Subletting can be a useful financial tool, but it comes with significant responsibilities and potential risks. Before entering into a subletting arrangement, carefully consider the legal implications, consult with your landlord or property manager, and ensure you have a robust, clearly-worded agreement in place. By taking these precautions and following best practices, you can help protect yourself and potentially benefit from the advantages that subletting can offer.
Happy investing!
