Pros and Cons of Allowing Tenants to Sublease
A sublease is a not-unheard practice. But as a landlord, you need to fully understand all the aspects and pitfalls this practice involves. First, being aware of the sublease essence and Dubai legislation towards it, you can stand firmly on your rights. Second, you need to have the full picture of your possible benefits and all the risks a sublease may involve. This way you can make an informed decision whether to allow your tenant to sublet or not so as not to regret in the future.
What Landlords Need to Know
The most important thing landlord needs to know about sublease is what the Law states. Here are three sublease-considering bullet points in accordance with Law No. 26 of 2007 and Law No. 33 of 2008:
- The sublease is allowed in Dubai, both for residential and commercial property. But on certain terms and conditions (read further bullet points to know about them).
- Your tenant has no rights to sublet your property without your written consent. To clarify he can sublet only if you draw a tenancy agreement that contains the “approve-to-sublet” clause and provide written approval for this exact sublease.
- If your tenant does neither apply nor get your written approval but you find out he subleases your property, you can terminate your lease and evict your tenant and everyone who occupies your premise as well.
- The sublease contracts shall expire earlier or at least right the expiry date of your lease. However, you can allow some extension at your own discretion.
What Does It Mean to Sublease?
A sublease is a lease of a property by a tenant to a subtenant. In other words, this is a relationship between the tenant and the third party regarding the third party’s possibility to benefit from your property. Simply put, this is a situation when you rent out your unit to your tenant, and this tenant, in its’ turn, leases your unit to another person or company.
Typically, the following terms are used regarding this practice:
- The main tenant or original tenant, an individual or a company to whom you rent out your premise;
- The subtenant or sublessee, an individual or a company that rents the premise from your original tenant;
- The sublessor, the main tenant that subleases the premise.
How does sublease change contract relationships established between you as a landlord and your tenant? The first answer is nohow. To clarify, your landlord’s obligations to your tenant remain the same. This means you still shall undertake all the maintenance and repair tasks on the scale your tenancy agreement states. Moreover, your tenant’s obligations to you as his landlord remain the same as well. This means, he or she still shall pay you the rent in due date and in full and take all responsibilities for damages caused to your property. However, read further to know where the pitfalls lie.
Sublet Pros for Landlords
Most sources state three main sublet pros:
- The tenant doesn’t terminate the lease and continues to pay rent, so the landlord doesn’t have to find another tenant or suffer from the unit vacancy;
- The landlord doesn’t waste his time on finding subtenant as this is what the original tenant accomplishes on himself;
- The landlord has no obligations to the subtenant, so he can sit back and relax while the original tenant shall bear all the duties.
However, let’s dig deeper to understand whether these points really benefit the landlord.
First, do you really need a third party that, in fact, acts as a middleman for you getting your rental income? If your tenant can find another person who wants to occupy your rental unit, you can do it as well. And, perhaps, even on better terms and conditions.
Second, is it really beneficial that you don’t take part in a screening procedure? After all, it is your property and it is fair you want someone reliable and committed to your rules and policy to occupy it. But with a sublease, you don’t have any guarantees regarding the subtenant’s reliability. Very often, the subtenant treats the rental property with less carelessness and more negligence.
At last, you have no obligations to the subtenant, but no one frees you from your landlord obligations, which you have got under your tenancy contract. Thus, you still are responsible for maintenance and repairs regarding your property. After all, it is in your best interest to keep your premise in good order.
What You Need to Know Before Allowing to Sublease
Now, let’s go deeper to the sublease pitfalls. You need to be aware of them as they pose certain risks.
First, it is important to know that a non-approved sublease contract is not registered with Ejary and Rental Dispute Center doesn’t resolve any disputes considering subtenants. Even if sublease is run legally therefore, you as a landlord can’t case a file against the subtenants if something goes wrong.
Second, according to the article (30) of Law No. 26 of 2007, even if you apply for lease termination to RDC and it satisfies your claim, the subtenant is allowed to continue to occupy your rental unit. So, you can’t bring another tenant to this unit. The consequence gets more black colors in case you initiate lease termination because of a non-payment issue. The matter is you can’t claim the subtenant to pay for the original tenant. Thus, allowing your tenant to sublease your rental unit, you risk having great difficulties in getting your rental income.
To sum up, we don’t recommend you to allow your tenant to sublease your property. Definitely, your benefits here are miserable but your risks and possible losses are real and crucial. At BSO, we vote with both hands for the safe rental business and a sublease can greatly threaten this safety. And we do ensure safe and hazard-free rental business for our clients. Contact us to know more about your options.