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A Guide to Breaking A Rental Lease
●June 11, 2021●6 minute read
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Unfortunately, sometimes life happens. You might need to move interstate for a job, or you might have broken up with a partner. Regardless, there might be a time that you are considering breaking your rental lease early.
In this easy guide, let’s break down everything there is to know about breaking a lease: the costs of breaking a lease, the implications of doing so, and tips to make the process go smoothly.
Fixed-term vs. periodic lease
If you have a periodic lease agreement, this means that you can terminate the lease at any time by giving written notice within the required time period. However, if you are in a fixed-term lease, breaking lease is more challenging.
A fixed-term lease is a binding contract stating that you will pay a certain amount of rent for a specific time period. Once you have signed this lease, you have agreed and are bound to all of the terms and conditions stated in the lease. Meaning, breaking a lease isn’t a decision that should be made lightly. It can accompany a number of fees, and even have implications for your future rental applications.
How much does breaking my lease cost?
Terminating a lease agreement early comes with a range of costs. While there is not one standard cost for breaking a lease, some costs you could expect include:
- Reasonable re-letting costs (the cost of finding a new tenant);
- Reasonable advertising costs;
- Compensation for loss of rent (until a new tenant starts paying or the original lease ends).
If you live in New South Wales (NSW), you may be required to pay a ‘break lease fee’ if this is specified in the lease.
In line with these costs, the landlord must take reasonable steps to re-let the property and cannot continue to claim on these once the property has been rented.
How can I break my lease?
The laws around breaking a lease can vary between states or territories. There are also a number of legally specified reasons for early termination of a lease, which will be discussed in detail later. However, there are some general exceptions listed on the respective tenancy websites for breaking a lease:
Queensland, Australian Capital Territory, and NSW
As aforementioned, in NSW the landlord can charge a specific ‘break lease fee’. To end your tenancy in these states, you must do the following:
- Give your landlord/property manager written termination notice at least 14 days before you will be vacating, and/or;
- Apply to the NSW Civil and Administrative Tribunal (NCAT) for a termination order. If NCAT accepts the order, the tenancy will end on the date specified by them, by which you must have vacated the property.
The landlord can ask tenants that are breaking their lease to pay one month’s rent for every year remaining on the lease agreement. At six years, this amount is capped, meaning the landlord can ask for a total of six months of rent.
When a tenant vacates a property early in South Australia, it is considered to be abandonment. If the rent hasn’t been paid in full, the owner can claim re-letting costs for the property.
Despite this, the tenant has the right to ask the following questions:
- Has the property been advertised properly?
- Has the demand in the area dropped and, therefore, should the rent have been reduced?
- Is the property being shown to prospective tenants?
Once the tenant has vacated the property, they are no longer responsible for cleaning or gardening.
Tenants are required to give at least 21 days notice in writing with their intention to break the lease. In addition to this, there are special considerations for people suffering from family violence, reducing this timeframe to seven days.
If the landlord rejects the early termination, and another tenant cannot be secured, the security deposit can be kept to cover the loss of rent and/or cost of finding a new tenant. In addition, more costs can be claimed if the landlord’s costs are higher than the amount of the security deposit.
Legal reasons for breaking a lease
Without a reasonable legal reason for breaking your lease, your early vacate could be treated as abandoning the tenancy. In general, the common legal reasons for breaking a lease include the following:
If remaining in the tenancy will result in undue financial hardship, most states and territories have legislation that allows you to apply to the appropriate tribunal to have the lease terminated early. Despite this, you could still be required to pay compensation.
If the premises becomes uninhabitable, you can typically terminate your lease agreement early. By ‘uninhabitable’, this means that the property is dangerous or poses a health hazard to live in. For example, if the property has drainage or lighting issues, there’s a construction defect or another issue that makes the property unlivable.
If your lease agreement is breached by the landlord, you can apply to have the agreement terminated. In some states, you may be required to have the break occur multiple times before they permit this.
A landlord breach might include:
- The landlord hasn’t remedied a fault outlined in a repair request;
- The landlord hasn’t kept the locks of the property in working condition;
- The landlord hasn’t respected the tenant’s privacy by entering the property without notice.
Does breaking a lease affect my future rental applications?
Unfortunately, if you break a rental lease, it is possible for a future landlord to find this out through rental references and history. However, if you had a reasonable reason for breaking your lease, and have a pristine rental history and good references despite this, it might not cause any real problems.
In order to ensure that you remain on good terms with a landlord, even after breaking a lease, it’s important to ensure that you follow the correct procedures for breaking the lease.
Additionally, it’s vital to adhere to the requirements of breaking your lease. Specifically, ensuring you continue to keep up-to-date on rental payments and other costs associated with breaking the lease, is important. Not doing so is considered a breach of contract, and can cause you to be listed on a tenancy blacklist such as TICA. This will make finding a new rental extremely difficult, as it is a site used by most property managers (like a credit check for lenders) to verify the viability of a rental tenancy application.
Tips for breaking a lease smoothly
To make the process of breaking your lease as smooth and positive as possible, there are some things you can do to ensure this.
Read your lease carefully
Your tenancy agreement outlines all rules of your lease, so you should check for any “early termination” clauses. Keep an eye out for terms like “early release”, “sub-let” and “re-let” as these are common terms used when referring to breaking a lease. This clause will outline any costs of breaking the lease, and any rules regarding renting out your room or property to another person.
Communicate openly and clearly with your landlord
At the end of the day, breaking a lease happens. Your landlord or property manager will know how to deal with this, and can guide you through the process. However, it’s important to give your written notice as soon as possible so that they can begin the process of finding a new tenant. In some cases, a lease can be broken if a mutual agreement is reached.
If you reach a mutual agreement with your landlord or property manager, make sure you get this in writing.
Find a new tenant
You could potentially save yourself some money by finding a new tenant yourself to take over your lease. While you could still be liable to some break-lease fees, you would save money on advertising costs and the cost of covering the rent until your lease ends and/or a new tenant is found. It’s important to check your state or territory legislation around finding a new tenant, specifically in updating tenancy agreements, transferring bonds, and the period that you’re liable for covering the rent.
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Written by Rachel Horan
Rachel Horan is a Content Writer for Jacaranda Finance. Rachel has previously produced content for Brisbane City Council, Black & White Cabs, and Clubs Queensland. She has a Bachelor of Mass Communication with Distinction from the Queensland University of Technology.