Subletting in NZ Rentals: What Landlords Need to Know

Subletting is one of the more common disputes in NZ tenancy law, and many landlords are unclear about where they stand. The short version is: tenants cannot sublet without the landlord's written consent. But the rules around what the landlord can do, and when they can refuse, are more nuanced than most people realise.

What Is Subletting?

Subletting (also called sublease) is when a tenant rents out all or part of the property to a third party (the subtenant) while remaining a party to the original tenancy agreement. The original tenant continues to be responsible to the landlord for rent and property condition. The subtenant pays the tenant, not the landlord.

This is different from adding a flatmate, which is a separate situation with its own rules.

The Default Rule: Written Consent Required

Section 10 of the Residential Tenancies Act 1986 states that a tenant must not sublet or otherwise part with possession of the premises without the landlord's prior written consent. This applies to both periodic and fixed-term tenancies.

The consent must be written. A text saying "yeah that's fine" creates ambiguity. If you agree to a sublet, put it in writing, specify the subtenant's name, and set any conditions.

Can You Unreasonably Refuse?

Here is where it gets complicated. Section 10 also provides that the landlord must not unreasonably withhold consent. If a tenant makes a reasonable subletting request and you refuse without a legitimate reason, you may be in breach of the Act.

What counts as a reasonable refusal? The Tenancy Tribunal has considered this in various cases. Generally, reasonable grounds for refusal include:

• The proposed subtenant has a history of property damage or non-payment of rent
• Subletting would exceed the property's permitted occupancy limit (fire safety, health standards)
• The subletting arrangement would constitute a breach of your tenancy agreement conditions (e.g., no short-term lets)
• The tenancy agreement expressly prohibits subletting and the prohibition is reasonable in the circumstances

What does NOT count as reasonable grounds:

• You just do not want any subletting
• You have not met the proposed subtenant
• You are concerned about increased wear and tear (without more specific evidence)

Can You Ban Subletting Entirely in the Tenancy Agreement?

Many tenancy agreements include a clause prohibiting subletting without consent. This is generally enforceable. However, you still cannot unreasonably refuse a specific subletting request. The clause means the tenant cannot sublet unilaterally - they still need to ask. Whether you can then say no depends on the circumstances.

What About Short-Term Accommodation (Airbnb)?

This is the grey area that catches many landlords. Short-term accommodation platforms like Airbnb technically involve "parting with possession" of the premises, which requires your consent under the Act.

If a tenant Airbnbs your property without consent, this is a breach of the tenancy agreement that could lead to termination. Many modern tenancy agreements now explicitly address short-term accommodation, stating it is not permitted without prior written consent.

If your tenancy agreement does not address this, you should update it for new tenancies. For existing tenancies, you can write to the tenant to confirm your policy.

Adding a Flatmate vs Subletting

These are different legal arrangements. A flatmate lives with the tenant and shares the property as co-occupants. There is no sub-tenancy - the flatmate is not a tenant in the legal sense. The original tenant is responsible for the flatmate's conduct.

Tenants generally have the right to have a reasonable number of occupants without needing the landlord's consent. However, the landlord can reasonably object if the number of occupants exceeds what the property can safely accommodate.

If a tenant "adds a flatmate" who is actually paying rent and occupying a separate area, this may look more like subletting than a flatmate arrangement. The substance of the arrangement matters, not just what it is called.

What If a Tenant Sublets Without Consent?

Subletting without consent is a breach of the tenancy agreement. The landlord can:

1. Serve a notice to remedy, giving the tenant a period to rectify the breach (typically by removing the subtenant)
2. If the tenant does not remedy the breach within the specified period, apply to the Tenancy Tribunal for termination of the tenancy

The Tribunal will consider whether the subletting has caused actual harm or prejudice. Subletting to a reliable person who has caused no damage is viewed differently from subletting to someone who has damaged the property or failed to pay rent.

The Subtenant's Legal Position

If a tenant sublets without the landlord's consent, the subtenant generally cannot rely on the RTA for protection against the landlord. The landlord's lease with the original tenant takes precedence. If the original tenancy is terminated, the subtenant has no right to remain.

This is a significant risk for subtenants. If they have paid rent in advance to the original tenant, they may have a claim against the tenant personally, but they cannot enforce this against the property.

Protecting Yourself as a Landlord

• Include a clear subletting clause in your tenancy agreement that requires written consent and prohibits short-term accommodation without consent.
• If a tenant asks to sublet, get a subletting agreement in writing that includes the subtenant's name, the duration, and any conditions.
• During inspections, note whether there appear to be additional occupants or signs of short-term rental activity.
• Respond to subletting requests promptly. Unreasonable delay can itself constitute unreasonable withholding of consent.

If you are managing multiple properties, keeping track of tenancy conditions, subletting approvals, and occupancy records across your portfolio is much easier with proper software. RentManager lets you attach notes and documents to tenancies so there is always a clear record of what was agreed.