What does "subletting" mean in the context of leasehold agreements?

In the context of leasehold agreements, "subletting" specifically refers to the act of renting out the property to another individual. This often occurs when the original tenant (the leaseholder) wishes to leave or is unable to occupy the property for a period of time but does not want to terminate the lease completely. Instead, they allow a third party to occupy the space under the terms of the original lease. This is crucial because it enables the original tenant to potentially recover some of their rental costs while maintaining the leasehold agreement with the landlord.

Subletting can include specific conditions, such as the need for landlord approval, and it is often addressed in the lease itself. It is a commonly utilized option in leasehold agreements that allows flexibility for tenants, while also ensuring that the property remains occupied. Understanding this concept is vital for both landlords and tenants as it impacts the management and rights related to the leased property.