The simple fact is that ending your lease early can be a costly process and should not be entered into lightly. However, if you are being relocated, have purchased a house, have run into financial or personal trouble or there is another reason that makes the situation unavoidable there are ways to manage the situation and to minimise the stress and expense involved.
How do end my lease early?
If you need to end your lease early, the best thing to do is to get in touch with your property manager as soon as possible to explain the situation as well as to confirm the process and costs with them. You will need to provide notice in writing to your landlord or property manager explaining the reasons for leaving and your planned vacate date.
You should then expect your property manager to start advertising the property for lease and to provide you with adequate notice of any inspections with prospective tenants. Although a real estate manager is not obliged to lease the property before it is vacated, most are understanding and accommodating and will advertise the property prior to your departure as this is in the best interests of both parties. It is advisable to be as co-operative as possible to ensure that as many interested parties are able to view the property and to keep the property in a presentable state for inspections. This will improve the chance that the property re-leased quickly which will, in turn, minimise your financial burden.
The landlord must take all reasonable steps to re-let the premises and can not claim rent for any period after the property is re-let. In most jurisdictions, the exit inspection will take place just before a new tenant commences a lease or the end date of the lease, whichever occurs first, so tenants are required to maintain the property as per lease terms until this time.
What fees are payable in order to break my lease?
There is typically no set break lease fee in Australia, however, tenancy agreements may require the vacating tenant to pay:
reasonable re-letting costs (often equal to one week rent plus GST or based on a specific formula set out in legislation);
reasonable advertising costs; and
compensation for loss of rent (until a new tenant commences a lease or until the end date of the lease, whichever occurs first).
Your residential tenancy agreement will set out the rules around ending your lease early. Landlords do have a duty to mitigate their losses and must take all reasonable steps to find a new tenant. Residential Tenancy bodies in each State will also have information on your obligations and rights as a tenant when breaking your lease.
Although the rules around Australia are similar there are a few special rules in various jurisdictions as discussed below. These rules will apply depending on the specific terms contained in your lease.
Queensland, NSW and ACT
To end your tenancy you must give the landlord or agent a written termination notice or order at least two weeks before you intend to vacate.
Some NSW tenancy agreements may contain a fixed break fee (for agreements of three years or less) but it can only be used if stated in the lease agreement. For agreements entered into from 23 March 2020, and under 3 year in duration, a mandatory break fee may apply with the set fee payable ranging from 4 weeks rent where less than 25% of the lease terms has expired to one weeks rent if more than 75% of the agreement has expired.
In the ACT, in the absence of a break lease clause in the lease, the tenant is required to pay rent until a new tenant is found but this is limited to the lesser of the end of the fixed term or 25 weeks).
In Victoria, tenants can be asked to pay one month’s rent (based on rent being paid at the time the lease is broken) for every full year remaining on the lease. This payment is capped to an amount of 6 months rent. Re-letting fees and advertising costs should only be paid pro-rata (e.g. if you leave 7 months into a 12 month tenancy you should only have to pay about 40% of these fees).
Tenants are required to give a minimum or 21 days notice of their intention to end their lease early. This notice period is reduced to only 7 days for tenants subject to domestic violence.
Tenants must give at least 28 days written notice to end a fixed term lease early. If a tenant moves out of a property before the end of the lease, it is considered abandonment. The owner can claim any loss caused by the abandonment but can only make such a claim if they try and re-let the property as soon as possible (i.e. they mitigate their loss). The tenant can ask the following questions to assess if the loss is being sufficiently mitigated:
Is the property being advertised appropriately?
Has demand dropped and should the rent have been reduced?
Is the property being shown to prospective tenants?
If the property is being advertised at a higher rent, has this delayed the property being leased?
The South Australian Civil and Administrative Tribunal have formulas that must be applied to all advertising and reletting costs.
The landlord can not change a break lease fee but can charge for advertising as long as these are clearly itemised. Once a tenant has left the property, the vacating inspection should completed and finalised, and the tenant is then no longer responsible for cleaning or gardening issues.
Landlords can keep your bond to cover loss of rent and costs to find a new tenant if they do not agree to an early termination of the lease and a new tenant can not be found. If the landlord costs and loss exceeds the bond, these additional costs can be claimed from the tenant through the tenancy tribunal. It should be noted however, that circumstances of hardship affecting the tenant, particularly if these occurred after the lease was signed, will be taken into consideration.
When can I break my lease without penalty?
Each state in Australia has slightly different rules applicable to break lease situations. Residential tribunals in the various states generally do allow tenants to end their lease early in exceptional circumstances including financial hardship, landlord breach of contract, severe medical illness, death of a co-tenant and domestic violence.
To determine if any of these criteria are met, you should contact your State’s residential tenancies authority or tenancy advocacy body. Any claim to end a lease early due to exceptional circumstance must be made to the relevant State tribunal and evidence will be needed to support your claim. For example, financial hardship claims will require bank statements, termination letters (if you have lost your job), financial statements or accountancy evidence (if self employed). Evidence enabling termination of a lease on domestic violence grounds may include a Protection Order or Police Protection Order, a report of domestic violence signed by a doctor, social worker, solicitor, domestic violence support worker or case manager, or an injunction for personal protection under the Family Law Act 1975 (Cth). If you succeed with your claim, the tribunal may reduce letting fees and the fixed term of the lease may be reduced (so you will not need to pay rent beyond that time).
If the landlord has breached the lease, there may be grounds to terminate the lease from a certain date and re-letting fees, advertising costs and on going rental payments will not be payable by the tenant.
For specific rules applicable to each State we recommend contacting the relevant residential tenancies authorities and tenant advocacy bodies, all of whom can clarify the rules and may be able to assist in a dispute situation, see list below.
Do I need to pay rent when I break my lease?
In all jurisdictions, tenants breaking their lease must continue paying rent until a new tenant is found or until the end of the lease, whichever occurs first.
There is nothing to stop tenants from providing incentives to encourage interested renters to move in to a property earlier. Some strategies include offering to pay a portion of the rent until the end of the original lease term (effectively discounting the rent for the new tenant for a period), offering to pay the first week or two of the new tenant’s lease, offering to pay for additional advertising, sharing the listing on social networks or on other websites (e.g. Gumtree). Remember, the sooner a new tenant moves in the sooner you can stop paying rent. Landlords must still approve new rental applicants but this approval can not be withheld unreasonably.
One of the most important mistakes you can make as a tenant when you break your lease, is to not continue to pay your rent as required under the lease. This will be considered a breach of the tenancy contract and could result in you being listed on a tenancy blacklist. Once you are listed on national tenancy database, this will negatively impact your ability to rent a property in the future as it is standard practice Australia-wide for real estate agents to check these databases when processing and approving tenancy applications and they will be reluctant to let a property to you if you have a negative rental record.
For specific rules applicable to each state and to ensure you have the most accurate and up to date information, we recommend contacting the relevant residential tenancies authorities and tenant advocacy bodies in your State, all of whom can clarify the rules and may be able to assist in a dispute situation. Your local Brisbane relocation consultants, Habitat Relocations, offer departure services which include advising on the rules when leaving a rental property early as well as managing your exit clean, vacate inspection and negotiating your bond refund.
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