Assignment
Assignment is when a tenant transfers their whole interest in the property to another person. For example, if a tenant signed a 12-month tenancy agreement (12-month lease) but decided to leave after 6 months, they could get another person to move in and take over their lease, ie the original tenant's interest in the property would pass to the new tenant. The new tenant would take the place of the original tenant, paying rent directly to the landlord, and having all the rights and responsibilities of the original tenant.

Although the original tenant's interest in the property has passed to the new tenant, the original tenant has sometimes been held responsible for loss or damage caused by the new tenant.

If you do assign your interest, you and the new tenant must notify the Residential Tenancies Bond Authority. You must fill out a Transfer of Bond Form which states that your bond is now to be held on behalf of the new tenant. See the Bonds leaflet for more information.

Sub-letting
Sub-letting is when a tenant transfers part (not all) of their interest under a lease to another person. The first tenant is called the head tenant and the second tenant is called the sub-tenant. The agreement between them is called a sub-lease. The sub-lease may be for part of the premises (eg a room) or for a period of the head tenant's tenancy. The sub-lease may be for a fixed term, or it may be periodic (month to month). The head tenant may or may not live in the property at the same time as the sub-tenant.

Examples of a sub-letting situation are

The head tenant is considered to have made another tenancy agreement with the sub-tenant, while still keeping their agreement with the owner. The sub-tenant treats the head tenant as their landlord, and the head tenant is responsible to the sub-tenant for all the duties of a landlord. For example, the sub-tenant would tell the head tenant of any repairs needed on the property, and could make a compensation claim against the head tenant if those repairs were not done and the sub-tenant suffered loss as a result. At the same time, it would still be the owner's duty to the head tenant to do the repairs, and the head tenant could claim compensation against the owner if they weren't done.

The head tenant can also be held responsible for any loss that the landlord suffers because of the actions of the sub-tenant. For example, if the sub-tenant caused damage to the property the landlord could claim compensation from the head tenant, who would have to try and recover the money from the sub-tenant.
Sub-letting or co-tenancy?

Just because a person is sharing part of a house or flat with another person does not necessarily mean they have sub-let. There is often confusion about whether a tenant is a sub-tenant or a co-tenant. Circumstances which may indicate a sub-letting situation are

None of these circumstances alone will prove there is a sub-letting or co-tenancy situation, as the legal situation depends on the facts in each particular situation.

If you are considering sharing your home with another person, you could be sub-letting. If you are sub-letting, be aware that you will become that person's landlord. This means that you have the same legal obligations to that person as your landlord has to you (eg providing rent receipts, ensuring repairs are carried out etc).

While it is not always clear when a sub-letting situation exists, the difference between this situation and a co-tenancy can be important if a dispute arises between yourself and another person you live with. A dispute between a head tenant and a sub-tenant can be taken to the Victorian Civil and Administrative Tribunal, and the Residential Tenancies Act 1997 applies. The Tribunal cannot, however, deal with disputes between co-tenants, and people in these situations may need to take action in the Magistrates' Court, which is more expensive, time consuming and risky. See the Shared households leaflet for more information.

Your right to assign or sub-let
Tenants cannot assign or sub-let without the consent of the landlord. However, the landlord cannot unreasonably withhold consent. If the landlord withholds consent, the tenant can apply to the Tribunal for an order that the consent of the landlord is not required. The landlord or agent cannot charge a fee for consenting to an assignment or sub-letting.

If you assign or sub-let without consent, the landlord can give you a Notice to Vacate and make an application to the Tribunal to have you evicted. If you receive a Notice to Vacate you should contact the Tenants Union or your local tenant advice service for advice.

Breaking a lease
If you want to get out of your lease early, it is not recommended that you do so by assigning or sub-letting to another person. A tenant who assigns or sub-lets can still be held responsible for losses that the landlord suffers because of the actions of the new tenant.
If a new tenant is found to take over the property, the lease between the original tenant and landlord should be ended and a new lease entered into between the landlord and the new tenant. In practice, most landlords and estate agents will consent to the signing of a new lease, although they may refer to this process as 'assignment'.