One proposed solution to help low income and disadvantaged households access housing in the private rental sector is through ‘head leasing’.
Head leasing is where a private rental property is rented from the landlord/owner by a legal entity, such as a community housing provider (CHP) or a government agency, which then on lets the property to a low income or disadvantaged tenant. In such cases, the CHP will take responsibility for making sure the property is maintained and that the landlord receives their rent on time. The tenant will pay an agreed rent to the CHP, which in the case of a subsidised rent may be less than the rent paid by the CHP to the landlord.
In some cases the CHP may be fully or partially responsible for paying the rental bond to the landlord, and may negotiate an extended time period for the lease on the property. This can ensure that tenants have a high degree of stability in their housing if they choose. If the tenant moves out the CHP is responsible for finding another tenant.
The advantages of head leasing for landlords is that they have a guaranteed income for the length of the lease; that maintenance and any damage caused by tenants will be repaired by the CHP; and that they don’t need to use (and pay for) the services of a real estate agent to manage the property. This means the CHP may be able to negotiate a lower rent than might otherwise be the case.