When you sign a lease, you are committing to stay and pay for the full term. But what happens if your circumstances change and you want to move out before the end of the term? In most cases, you will be facing costs. There are some circumstances, however, where a fixed term agreement can be terminated early without penalty. These rules are contained in the Residential Tenancies Agreement. Find out your rights and responsibilities so you are prepared if you ever find yourself in this situation.
What Costs could I be facing?
As a tenant, the costs of breaking your lease early could be significant. You may need to pay:
- Rent until either a new tenant takes over or your fixed term period ends – whichever occurs first, AND
- A percentage of the advertising costs and the agent’s reletting fee. For example, if you break the lease 9 months into a 12-month lease, there is 25% of the lease remaining, so you may expect to pay 25% of these amounts.
How Can I minimise the Costs?
The best thing you can do is to provide as much notice as you can. The landlord or agent is then responsible to take reasonable action to find a replacement tenant as soon as possible. Do what you can to make things as easy as possible for the landlord and/or agent – for example, by making it easy for them to show the premises to potential new tenants.
What if I don’t feel that my landlord or agent is making reasonable effort to re-let? The first step you should take is to check the agent’s website and their list of available rental properties.
The landlord and agent are under a duty to keep your costs to a minimum. If they do anything that makes it more difficult to find a tenant, such as increasing the rent or unreasonably rejecting potential tenants, you may not be required to pay the full amount that they request from you.
Once the new tenant is found, you will be required to pay the full amount owed. If you refuse to pay or disagree with the amount requested, the landlord or agent can claim your bond or apply to the NSW Civil and Administrative Tribunal. Be warned – if you owe more than the bond amount, your name could be listed on a tenancy database which could make it difficult for you to rent again in Australia in the future.
Optional Break Fee
An option you and your landlord could agree to is to include a break fee clause in the terms of your lease. This clause sets a fixed fee amount you agree to pay if you move out before the end of the fixed term.
If the lease’s term is 3 years or less, the break fee is:
- 6 weeks rent if you move out in the first half of the term
- 4 weeks rent if you move out in the second half of the term.
If the fixed term is longer than 3 years, you can decide on an appropriate amount with your landlord and include it in your agreement.
Breach by the Landlord
If your landlord has not complied with the terms of your tenancy agreement, you may be able to break your lease without penalty. For example, this may apply where the landlord has failed to keep the property in reasonable repair.
You should give your landlord 14 days’ written notice of termination where possible. Alternatively, you can apply to the Tribunal without giving notice, though you will need to provide evidence to satisfy the Tribunal that the breach justifies ending the lease.
Breaking the Agreement without Penalty
Limited circumstances exist where you can break a lease early without facing penalty. You can give 14 days’ written notice if any of the following circumstances exist:
- You have an offer of social housing.
- You need to move to an aged care facility or nursing home (not retirement villages).
- The landlord has put the premises up for sale, but you were not told before you signed the lease that it would be sold.
- Mutual consent with your landlord to break lease early with no costs.
In these circumstances, you will only be liable to pay rent until your notice ends and you hand over possession of the premises.
Finally, if it would cause undue hardship for you to stay in the premises until the end of the fixed term, you can apply to the Tribunal to terminate your lease early. You must satisfy the Tribunal that you face special circumstances which did not exist when you first moved in, and that your hardship is serious or severe. If the Tribunal accepts your request, it may order you to compensate the landlord for lost rent and/or other losses.
Take the Right Steps Today!
As you now know, breaking a lease early can be costly and time-consuming for both you and your landlord. It is best to avoid this situation where possible by ensuring that your lease term is suitable for your current and future circumstances. Alternatively, negotiate with your landlord to include a clause in your contract that minimises your costs if you do need to move out earlier than expected. This could save you a lot of money and stress down the track!
For more information or advice, contact me today at Vogue Real Estate.
Vogue Real Estate
Head Office: 33/9 Hoyle Avenue, Castle Hill, NSW 2154
Ph: (02) 8858 3260