Guide to Subletting: Pros & Cons + FAQs

Subletting is a way to offer more flexibility to the landlord, tenant, or both parties involved. The legal arrangement is straightforward, but the landlords need to do some due diligence before signing a sublease. We did all the research for you and put it in one place to simplify the decision-making process.

How Does Subletting Work?

Subletting is a contract where a tenant rents out their apartment to another tenant while their name is still on the lease. Some refer to subletting as subleasing or "taking over a lease."

The original renter is referred to as the sublessor, and the tenant is the sublessee.

What to Consider Before Allowing Subletting: Pros & Cons

Subleasing can be a win for landlords, but there are pros and cons to any situation. Here's what to consider before you allow a tenant to sublease.

Pro: Subleases can transition into full-time renters

A sublessee can quickly turn into a full-time renter once the contract is up. Landlords can screen the tenant to determine if they want to offer an annual lease. Already having a potential renter in place also means less administrative work and the need to advertise the unit.

Of course, the sublessee may decline to take over the lease once the original contract is up.

Pro: You save money

It takes time and money to clean out an apartment, re-paint or make repairs, advertise the unit, and give tours. There are also costs associated with processing apartment applications and validating a new tenant's information.

Subleasing makes it easy to bring in a new tenant without all of the time and money involved.

Pro: Your rental income stream isn't interrupted

When a tenant breaks a lease, a landlord can impose related fees outlined in the lease. However, it could also mean a loss of ongoing income if you can't find a new renter right away.

Subletting allows the income stream to remain intact and stop any financial interruptions.

Pro: Subleasing can foster a positive relationship with renters

Some renters need to sublet for a short period due to a temporary work relocation, family emergency, or taking a sabbatical. If you value the original tenant, allowing a sublease nurtures the relationship and keeps the door open for valuable renters to come back.

The same scenario goes for your lessee. Landlords can get to know the subletting tenant and foster an ongoing relationship. When it's time to sign a new lease, there's already a positive relationship in place with your new tenant.

Con: The subletter may be less trustworthy

A sublease doesn't necessarily bring value to a landlord's business. What if the subletter is less trustworthy than the original lessee? Suddenly, the landlord must deal with rent late payments, excuses, and negative interactions with the lessee.

Con: It could be challenging to collect rent

Subletting usually states the original tenant is responsible for the rent. Therefore, if the sublessee fails to pay the landlord, the original renter should step in and pay the rent. However, if the renter is traveling or dealing with a personal issue, it may be challenging to reach and discuss the problem with the sublessee.

Con: Subletting may not be allowed in your state

Even if you're encouraging about subletting and have no issue with it, the practice may not be allowed in your state. Check your local ordinances or lawyer to determine if subletting is a viable solution for you.

Things to Include In Your Sublet Terms

Once you decide if subletting is right for you, make sure to include the correct terms. Here's a round-up of what to add to your sublet terms:

• Start and end dates of the sublease
• Name
• Current home or apartment address
• Employment information
• Reason for subletting
• Amount of rent to be paid
• Amount of security deposit
• Responsibilities subletter will take on (HOA fees, etc.)

Subletter Template

Save yourself time and resources by using a done-for-you sublease template. Ensure it includes all of the terms you need before passing along for your tenant and sublease to sign.

Frequently Asked Questions (FAQs):

There's a ton of components that are involved in subletting! Here's our answers to some of the most frequently asked questions.

What if Your Renters Charge More Rent to The Subletter?

Some renters want to profit while subletting, especially in a competitive market where apartments are in high demand. If you have an issue with the renter making more off the apartment than its market value, make sure to clarify your terms and expectations with the original tenant.

In some cities like San Francisco and New York City, subletting is illegal in a rent-stabilized or rent-controlled apartment. If you're open to subletting, make sure you understand your local ordinances.

How Do Landlords Find a Subletter?

Landlords are not required to find a subletter, and the responsibility is on the original tenant. However, a landlord may prefer to find a subletter of their choosing. The good news is short-term leases and leases with some flexibility are usually in high demand.

If you want to save yourself time and money, there are solutions. Apartment List offers landlord services, including listing apartments to help connect with interested renters.

How to Protect Yourself While Subletting

Just like finding a quality tenant, a landlord has avenues to protect themselves from a lousy subletter. A criminal background check helps identify any negative behavior or suspicious past. Although the original renter is responsible for paying the rent in a sublease, a landlord may still choose to run a credit check on the lessee.

A financially established sublessee is more likely to pay their rent on time and puts less stress on the landlord from chasing down payments from the original renter.

Are There Any Alternatives to Subleasing?

There is an alternative in situations where a landlord is open to a new tenant but doesn't want to sublease. A lease assignment is a formal agreement that transfers the original tenant's rights and obligations to a new renter. A lease agreement may be valuable if you feel confident in the new renter, don't want to deal with subleasing or a new lease, and give the original tenant some flexibility.

However, landlords typically won't collect on fines and fees for the renter breaking the lease early, and the lease isn't considered broken but re-assigned.

Final Thoughts - Should I Allow Subleasing?

Subleasing can be an easy way to avoid rental income interruption and find a new tenant. There are some downsides involved, but you can protect your rental business from a negative experience with proper planning and approach. Weigh the pros and cons of subletting to determine if it's right for you.