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Assignment and sub-letting

What is an assignment?

Assignment is when a renter transfers their interest in a property to another person. The new renter takes over from the old renter and pays rent directly to the rental provider.

To assign an interest to someone else, a person must also lodge a ‘transfer of bond agreement’ so that they are not held responsible for any damage done to the property after the lease is assigned to someone else. It is also to ensure that the new renter is able to get their bond back when they leave.

See Bond repayments

What is sub-letting?

Sub-letting is when a person (the head-renter) rents a property from a rental provider and then rents all or part of that property to someone else. The person who sub-lets is called the sub-renter. This becomes a separate rental agreement.

Must inform the renter before agreement reached

A person who is not the owner of a property that is up for rent must disclose this fact to anyone who is thinking about renting the property. This applies to assignments and sub-letting. This is one of the mandatory disclosures required before a person agrees to rent the property.

See s. 30D—Residential Tenancies Act 1997 (Vic)(opens in a new window). and Starting a rental agreement.

Need permission from the rental provider

A renter under a rental agreement must not assign or sub-let the rented premises (or any part of the premises) without the rental provider's written consent. Any assignment or sub-letting arrangement made without the rental provider's consent is invalid unless VCAT has made an order stating that the rental provider's permission is not required.

However, a rental provider must not unreasonably withhold consent to the assignment or sub-letting. For example, it may not be reasonable to withhold consent if the person that the property is to be sub-let to has a good rental history and steady income. It is also unreasonable to withhold consent for a discriminatory reason.

In public housing situations if the rental provider is the Director of Housing. This is because it would disadvantage people on the waiting list for public housing.

See s. 81, 83—Residential Tenancies Act 1997 (Vic)(opens in a new window).

Application to VCAT

If the rental provider does not agree to all or part of the property being sub-let, the renter may apply to VCAT seeking an order that the consent of the rental provider is not necessary.

See s. 82—Residential Tenancies Act 1997 (Vic)(opens in a new window).

Rental provider may issue a notice to vacate

If the renter sub-lets the property without getting the rental provider's consent, the rental provider can issue a notice to vacate. The notice must specify a termination date of not less than 14 days from date of notice.

See:

Notice by owner

A new provision was added to the Act on 29 March 2021, which makes it clear that if the rental provider is not the owner of the rental property, the owner may exercise the right of the rental provider and may issue:

  • issue a notice to vacate
  • recover possession of the property, or
  • give a breach of duty notice.

A classic example of when this may apply, would be where they have assigned the rental property to a head renter.

See s. 91ZZJ—Residential Tenancies Act 1997 (Vic)(opens in a new window).

No fee is payable

The rental provider is not allowed to charge a fee for agreeing to allow a renter to sub-let or assign their rented premises.

Penalty

The maximum penalty for charging a fee is 60 penalty units.

This offence is not one that can be dealt with by issue of an infringement notice.

See s. 84—Residential Tenancies Act 1997 (Vic)(opens in a new window).

More information

Legislation

Residential Tenancies Act 1997 (Vic)

  • s. 30D—mandatory to advise prospective renter if not the owner of the property
  • Part 2, Division 10—Assignment and sub-letting
  • s. 81—assignment and sub-letting by a renter
  • s. 82—renter may apply to VCAT
  • s. 83—Director of Housing may withhold consent
  • s. 84—rental provider cannot ask for a fee for giving consent
  • s. 91ZV—notice to vacate for sub-letting without rental provider's permission
  • s. 91ZZJ—notice by owner

See Residential Tenancies Act 1997 (Vic)(opens in a new window).

Tenants Victoria

This specialist community legal centre website has information about subletting and assigning a lease:

See Tenants Victoria—Lease transfers and subletting(opens in a new window).

Consumer Affairs Victoria

The consumer site has information about sub-letting and ending a sub-letting arrangement. There is also information about the difference between co-renting and subletting.

  • Sub-letting
  • Ending a sub-letting arrangement
  • Co-renting (renting with other people)

See Consumer Affairs Victoria—Starting and changing rental agreements(opens in a new window).

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