Head Lease

What is a head lease? 

A head lease refers to where a rental property is rented from a landlord by a legal entity such as a government agency or housing provider. Here the entity can lease the property to tenants and is given the responsibility of managing the property. When head leasing, you’re essentially allowing someone to manage the property on your behalf, while still retaining ownership. 

What is the purpose of head leasing? 

Legal entities typically take on head leases to provide programs such as social housing for disadvantaged individuals. This is because many areas simply have a lack of supply of public housing, resulting in entities having to take on a head lease. 

From the landlord’s point of view, head leasing removes a lot of the stresses including managing a property, selecting tenants and managing vacancies, making it an attractive option. It's also a more risk-averse investment approach as landlords are guaranteed rental income from their tenants. While the income might not be as much as leasing the property yourself, you still receive a portion afterwards. 

What responsibilities do I have as the property owner in a head lease arrangement? 

Despite the fact that many of the management responsibilities are delegated to the legal entity, you still have some responsibilities to fulfil as the owner. In most cases, you will still have responsibilities such as general repairs and maintenance to tend to.