Subletting requires landlords consent

2014-05

In a leasing transaction of a residential premises, an estate agent arranged for the head tenant to sublet the property to another party, arranging for both parties to sign a tenancy agreement.

However, the agent had not ascertained whether there was any restriction on subletting, and whether the head tenant had obtained the consent of the landlord for the subletting.

In fact, there were restrictions on subletting in the head lease between the landlord and the head tenant.
The landlord subsequently 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 head tenant – as the latter had breached the original tenancy agreement.

The sub-tenant later lodged a complaint with the Estate Agents Authority against the agent who arranged the subletting.

According to the Practice Circular relating to tenancy matters issued by the authority, estate agents handling subletting of properties should review the head lease between the landlord and the head tenant to see if there is any restriction on subletting, and whether prior consent for subletting has to be obtained from the landlord.

The agent concerned was disciplined by the EAA for failing to comply with paragraph 3.2.1 of the Code of Ethics – which states that estate agents and salespersons 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.