Sublease Agreements In WA: Legal Guide For Businesses

If you’re running a small business or startup in Western Australia, your premises can be one of your biggest costs (and one of your biggest commitments).

That’s why entering into a sublease agreement in WA can look like the perfect solution. Maybe you’ve found a location you love, but you don’t need the whole space. Or your business has outgrown (or underused) your current site and you want to recover some rent by subleasing part of it.

But subleasing isn’t just a “handshake and split the rent” arrangement. In most cases, you’re stepping into a legally layered relationship involving the landlord (head lessor), the original tenant (head lessee), and the subtenant (sublessee). If your paperwork doesn’t match what the head lease allows - or if key issues like insurance, outgoings, repairs or make good aren’t clear - things can unravel quickly.

Below, we’ll walk you through how subleasing works in WA, what to check before you sign, and what to include in a strong sublease agreement so you can protect your business and focus on growth.

What Is A Sublease Agreement (And How Is It Different From An Assignment Or Licence)?

A sublease is where the current tenant (the head tenant) leases all or part of their leased premises to another party (the subtenant) for a period of time.

In a typical sublease structure:

• The landlord has a lease with the head tenant (the “head lease”).
• The head tenant becomes a “mini-landlord” to the subtenant under the “sublease”.
• The head tenant usually remains responsible to the landlord for the head lease obligations (even if the subtenant causes the issue).

Sublease Vs Assignment

An assignment is different because the head tenant transfers their lease interest to someone else, so the incoming party becomes the tenant under the head lease (subject to the lease terms and the landlord’s consent).

If you’re considering taking over someone else’s lease entirely, this is often documented through a Deed of Assignment rather than a sublease.

Sublease Vs Licence (Like A Desk Or Room Arrangement)

A licence generally grants permission to occupy or use a space without creating a leasehold interest. These arrangements can be common in coworking or “rent a room” style setups.

If you’re sharing premises in a more flexible way (for example, casual use of a meeting room, or shared workspace access), a Property Licence Agreement may be more appropriate than a sublease.

The right structure depends on what you’re trying to achieve - and what the head lease permits.

Can You Sublease In WA? Start With The Head Lease And Landlord Consent

If you’re searching for “sublease agreement wa”, one of the most important realities is this: before you sublease, you should confirm the head lease allows it and follow any consent process.

Most commercial leases in WA include clauses about “dealings” - meaning whether the tenant can:

• sublease
• assign the lease
• licence the premises (or part of it)
• share occupation

Many leases require the landlord’s prior written consent before any sublease is granted. In some situations, the lease (or applicable law) may require that consent is not unreasonably withheld - but this depends on the terms of the head lease and the type of premises, so it’s important to check the specific wording and process you must follow (including providing documents and information about the incoming subtenant).

Retail Premises In WA: Extra Rules May Apply

If your premises are “retail” premises, WA has specific legislation (including the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)) that can affect disclosure, conduct, and dispute pathways.

Retail leasing can be technical. If you’re unsure whether the legislation applies to your shop, studio, kiosk, or showroom, getting advice early can save you from signing something you can’t practically comply with.

Practical Tip: Don’t Spend Money Before Consent Is Confirmed

It’s common for subtenants to want to move quickly - paying a deposit, ordering fitout, printing signage, or hiring staff.

Try to avoid committing to major costs until landlord consent is documented (and you’ve checked that your proposed use is permitted under the head lease and any relevant approvals).

What Should A Sublease Agreement In WA Include? (A Lawyer’s Checklist)

A strong sublease agreement should be written and tailored to the premises, the commercial deal, and the head lease obligations. Even “simple” subleases usually need careful drafting because you’re effectively building a second legal layer on top of the original lease.

Here are the clauses we commonly see as essential in a practical sublease agreement.

1) The Premises And The Permitted Area

Be specific about what is being subleased. Is it:

• the whole premises?
• a defined portion (for example, “Suite 2” or “rear warehouse bay”)?
• shared access areas (kitchen, amenities, reception)?

When the layout matters, a plan attached to the sublease can help prevent disputes later.

2) Term, Options, And Alignment With The Head Lease

One critical rule: a sublease can’t outlast the head lease.

You’ll want to check:

• the head lease expiry date (and any renewal options)
• whether the sublease term is shorter
• what happens if the head lease ends early (for example, termination for breach)

Subtenants often assume they’ll be able to “just renew” - but renewal depends on what the head lease allows and what the landlord agrees to.

3) Rent, Outgoings, GST, And Rent Reviews

Your sublease agreement should clearly set out:

• base rent
• when and how it’s paid
• bond or security deposit
• who pays outgoings (and which outgoings)
• whether GST applies and how invoices must be issued
• how rent increases work (for example, CPI, fixed percentage, market reviews)

One common issue in subleases is vague outgoings wording. If the head tenant is responsible for rates, insurance contributions, common area maintenance, or utilities, you’ll want clarity on what can be passed on to the subtenant and how it’s calculated. (For GST and tax treatment, it’s also worth confirming the right approach with your accountant or tax adviser.)

4) Use Of Premises And Compliance With Laws

The sublease should set out the permitted use (for example, “hair salon”, “light industrial warehousing”, “office for software business”).

That use must match:

• the head lease permitted use clause
• any centre rules (if in a shopping centre)
• planning and zoning requirements
• any safety and operational requirements applicable to your industry

If your intended use doesn’t fit the head lease, you could end up with a sublease you can’t legally or practically operate under.

5) Repairs, Maintenance, Fitout And Make Good

These clauses often become the most expensive parts of a lease relationship.

Make sure the sublease clearly addresses:

• who handles general repairs and maintenance
• what happens if the subtenant damages the premises
• whether the subtenant can do fitout works (and whether landlord/head tenant approvals are required)
• what “make good” requires at the end (for example, remove fitout, repaint, return to base build)

It’s also important to manage expectations: the subtenant’s “landlord” is usually the head tenant, but the real building owner may impose rules through the head lease that the subtenant must comply with.

6) Insurance And Risk Allocation

Subleases should deal with insurance in a practical way, including:

• what insurance the subtenant must hold (often public liability; sometimes plate glass, contents, business interruption depending on the site)
• who is responsible for claims caused by the subtenant’s operations
• how indemnities work if one party causes loss to another

Insurance requirements are often driven by the head lease, so the sublease should “mirror” those obligations where needed.

7) Default, Termination, And What Happens If The Head Lease Ends

Sublease termination triggers can include:

• non-payment of rent
• breach of permitted use
• failure to maintain insurance
• insolvency events

Just as important: the sublease should address what happens if the head lease ends (or is terminated). In many structures, if the head lease ends, the sublease may fall away too - leaving the subtenant without premises.

If you’re negotiating as a subtenant, it’s worth asking whether you can get extra protection (for example, direct recognition arrangements with the landlord). This isn’t always available, but it’s a key risk to understand.

Where the commercial risk is higher, a tailored Commercial Sublease Agreement can help properly allocate responsibilities and reduce nasty surprises.

Common Subleasing Risks For Startups (And How To Avoid Them)

Subleasing is popular with startups because it can reduce cost and increase flexibility. The flip side is that the arrangement can create “hidden” risks if you don’t do the right checks.

Risk 1: You’re Bound By The Head Lease (Even If You Haven’t Seen It)

Many subleases require the subtenant to comply with the head lease (sometimes by attaching the head lease as a schedule).

As a subtenant, it’s reasonable to ask for a copy of the head lease (with sensitive commercial parts redacted if needed) so you understand the rules you’re signing up to.

Risk 2: Unclear Outgoings And Shared Costs

When you’re subleasing part of a site, questions often come up like:

• Who pays electricity and internet?
• What if there’s one meter?
• How are cleaning, security, or rubbish removal costs split?

If it’s not in writing, it’s very hard to enforce later - especially when cash flow gets tight.

Risk 3: You Pay For Fitout But Don’t Control The Long-Term Lease

If you spend heavily on fitout, branding, or specialist installations, you’ll want certainty around term and renewal.

A sublease can work well here, but only if the term, options, and early termination rights are clear (and consistent with the head lease).

Risk 4: The Head Tenant’s Financial Problems Become Your Problem

If the head tenant stops paying rent to the landlord (or otherwise breaches the head lease), the landlord may terminate the head lease.

That can place the subtenant in a very vulnerable position, even if the subtenant has done everything right.

This is why it’s important to understand the stability of the head tenant and ensure the sublease is professionally documented.

A Practical Step-By-Step Process For Signing A Sublease Agreement In WA

If you want a clear roadmap, here’s a practical way to approach a sublease in WA without missing key steps.

1) Confirm What Structure You Actually Need

Are you subleasing the whole premises, part of it, or just using shared space occasionally?

If it’s flexible shared use, a licence may be a better fit. If it’s exclusive possession of a defined area for a set term, sublease is often appropriate.

2) Review The Head Lease Before Negotiating Final Terms

This is where many subleases go wrong. Check:

• consent requirements
• permitted use
• outgoings obligations
• fitout restrictions
• make good obligations
• any “no sharing” or “no subletting” clauses

If you already have the head lease and you’re the head tenant, it can help to get a Commercial Lease Review before you promise anything to a prospective subtenant.

3) Obtain Landlord Consent (If Required)

Landlord consent often requires you to provide:

• details of the incoming subtenant
• the proposed sublease document
• financial or business information
• evidence of insurance

Build time for this into your timeline. In the real world, consent can take longer than expected.

4) Document The Deal Properly

A well-drafted sublease doesn’t just “set rent and term”. It should also allocate risk and clarify responsibilities so both parties know where they stand.

For many small businesses, it’s worth having the paperwork prepared or checked by a lawyer, particularly where:

• the premises are retail premises
• fitout will be done
• the sublease is for part of a space
• outgoings are complex
• there are multiple parties sharing access

5) Plan For Exit Upfront

Before you sign, think about what happens if:

• your business outgrows the space quickly
• you need to downsize
• you want to sell the business
• the relationship with the head tenant changes

Having clear termination and handover processes can avoid disputes later. If you need advice on ending the arrangement, Lease Termination Advice can help you understand your options and risks before you take action.

Key Takeaways

• A sublease agreement in WA creates a layered legal relationship - the head tenant usually remains responsible to the landlord even if the subtenant causes the problem.
• Always start by checking the head lease for subleasing permissions and landlord consent requirements before committing to terms.
• A strong sublease should clearly cover the premises area, term (aligned with the head lease), rent and outgoings, permitted use, fitout/make good, insurance, and termination rights.
• Retail subleasing in WA can involve extra legal requirements, so it’s important to structure and document the arrangement carefully.
• Many sublease disputes come from unclear outgoings, shared access issues, and what happens if the head lease ends - these risks can usually be managed with the right drafting.

If you’d like a consultation about a sublease agreement in WA (whether you’re the head tenant or the incoming subtenant), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.