If you’re a property manager in Ontario, Canada, you may encounter tenants who are interested in subletting their rental property.
Subletting occurs when a tenant in a rental property decides to rent out a part or all of their unit to another person. This living arrangement is prevalent in high rent provinces to offset housing expenses.
With the ongoing affordability crisis, it’s important for landlords and property managers to understand the ins and outs of subletting and how it can impact your business.
Rights and responsibilities
In Ontario, tenants are legally allowed to sublet their rental property, but they must first obtain written consent from their landlord and/or property manager.
There are several reasons why a property manager might not want to allow tenants to sublet, including additional wear and tear on the unit and potential difficulties holding subtenants liable for damage or nonpayment.
But, under Subsection 97(2) of the Residential Tenancies Act, property managers can only turn down subleases on “reasonable” grounds, such as a failed credit or background check.
However, in the event that a tenant is considering moving out before the end of their lease, subletting could help maintain a steady rental income.
It could take a long time to find a replacement tenant. During this time, you could encourage the landlord to renovate the vacant unit to achieve a higher rental yield when the property is relisted. But allowing subletting can help fill a unit quickly and ensure that rental income continues to flow uninterrupted.
Property managers need to be aware of any local subletting laws, and consider having a policy in place that clearly outlines their requirements for permission (e.g. comprehensive tenant screening) and expectations.
Sublet efficiently with PropTech
In addition to having a subletting policy, PropTech can be a valuable tool for property managers.
There are plenty of property management platforms that can help streamline the subletting process to the benefit of all parties while making it easier for property managers, tenants, and subtenants. These programs can be used to manage rental applications, conduct background checks, and automate the lease signing process.
PropTech can also help property managers stay on top of payments. For example, PayProp comes equipped with a convenient online Tenant portal and automated payment reminders, which can help ensure that tenants pay their rent and/or their subtenant’s portion on time and in full.
Manage risks first
Knowing the law is essential to protecting your business while subletting, so property managers would be wise to study the basics of subletting and all relevant rules and regulations before fulfilling tenants’ requests to sublet their rental property.