This is a timely question, especially with vacancy rates extremely tight and concerns growing that proposed Federal Government changes to property taxation could further restrict the rental supply.

The Finance Brokers Association of Australia (FBAA) has warned that policy changes to property taxation, combined with broader economic pressures, could push thousands of households, including renters, to breaking point.

There are already signs the housing crisis is forcing more adults to rent together, including single parents teaming up with other single parents to secure accommodation, a trend increasingly being discussed in Facebook community groups.

As a result, more Australians appear to be considering entering “shared tenancy” arrangements similar to the share house model favoured by younger renters and university students. However, before signing on the dotted line, it’s important to understand the rules and risks involved.

The first step is understanding the difference between a “co-tenancy” and a shared tenancy.

In a co-tenancy arrangement, all adult occupants are named on the lease agreement. This setup generally works best when the tenants know each other well and are comfortable applying for and renting property together.

By contrast, a shared tenancy, often referred to as “subletting”, is more common when tenants do not know each other or are only loosely connected, such as through a Facebook community group. In this arrangement, one person acts as the “head tenant”, dealing directly with the landlord or property manager before subletting rooms to other occupants.

Naturally, shared tenancy arrangements come with greater risks, particularly for sub-tenants. However, for renters struggling with the cost-of-living crisis, they can provide a more affordable pathway into rental housing. Of course, living with strangers is not always easy - although even close friends can discover that sharing a rental property can test relationships.

Thankfully, all state governments have legislation designed to protect renters in shared accommodation arrangements. In Queensland, for example, these protections are specifically recognised through the inclusion of “Rooming Accommodation” in the Residential Tenancies and Rooming Accommodation Act 2008, which covers shared tenancies and common areas in boarding house-style accommodation.

That said, the head tenant in a shared tenancy arrangement generally has more control than tenants in a co-tenancy setup and will usually have the final say when selecting new sub-tenants.

In a co-tenancy arrangement, because all tenants are named on the lease, everyone shares legal responsibility for the property. If one tenant decides to leave before the lease expires, it is usually up to that person to help find a replacement tenant. Before moving in, the new tenant must typically be approved by the property manager or landlord, usually by completing a formal application process. This is important not only from a financial perspective, but also because landlords and agents need to know exactly who is living in the property for safety and occupancy reasons.

Importantly, if rent is unpaid or damage occurs to the property, all co-tenants can be held responsible for the costs.

In some shared tenancy arrangements, however, only the head tenant is legally responsible to the landlord for rental arrears or property damage, while the sub-tenants have a legal relationship only with the head tenant.

For sub-tenants, this can create additional risks. For example, if the head tenant leaves the property, is evicted, or breaches the lease agreement, the sub-tenant’s right to remain in the property may end immediately.

Likewise, if the bond is not properly lodged with the state rental bond authority for the head tenant, sub-tenants may struggle to recover their money. Because they have no direct legal relationship with the property owner, sub-tenants must also rely on the head tenant to organise repairs, maintenance and communication with the landlord.

For more tips on landing the right rental property as we head into the colder months of the year, contact your local Raine & Horne Property Manager.