Concrete Analysis | Be careful when renting a sublet property: if there’s no agreement in place you could end up evicted
- It is vitally important to check the principal tenancy agreement for any restriction against subletting, says Ruby Hon Yuen-ping, CEO of the Estate Agents Authority
Before deciding to rent a property, a prospective tenant should pay attention to whether it is being leased by the landlord or sublet by the principal tenant, as subletting may involve complicated issues and a subtenant’s rights might not be protected.
According to a circular about tenancy matters issued by the Estate Agents Authority (EAA), agents handling the subletting of properties should review the principal tenancy agreement between the landlord and the principal tenant to see if there is any restriction on subletting and whether prior consent for subletting has to be obtained from the landlord.
I would like to share a case in which an estate agent did not fulfil his duties in this regard and was sanctioned by the EAA, while his clients were evicted from the rented property.
In a leasing transaction of a residential property, an estate agent arranged for the principal tenant to sublet the property to a subtenant and also arranged for both parties to sign a tenancy agreement. The agent, however, had not ascertained whether there was any restriction on subletting and whether the principal tenant had obtained consent from the landlord for the subletting.
It transpired that there were restrictions on subletting in the principal tenancy agreement between the landlord and the principal tenant. Later, the landlord discovered that the property had been sublet. He then applied to the Lands Tribunal for the recovery of the exclusive possession of the property from the principal tenant as the latter had breached the tenancy agreement signed between both parties.
As a result, both the principal tenant and subtenant were evicted from the property before the expiry of the principal tenancy agreement and the subtenancy agreement. The subtenant later lodged a complaint with the EAA against the agent who had arranged the subletting.
In the above case, the estate agent concerned was disciplined by the EAA for failing to comply with the code of ethics, which states that estate agents and salespeople should be fully conversant with the Estate Agents Ordinance, its subsidiary legislation, the code of ethics, and other guidelines issued by the EAA from time to time and shall observe and comply with them in the course of their practice.
