Renting: Can I break my lease early?

If you can no longer afford your rent or simply want a change of scenery, we take a state-by-state look at the rules around breaking a rental agreement early including the notice periods and the potential costs.

Prime Minister Scott Morrison may have announced a six-month moratorium on evicting tenants who can’t pay their rent, but some renters aren’t pinning their hopes on a sympathetic landlord. Some tenants are heading off to a cheaper rental or bunking in with friends or family to save money.

There has been a big uptick in the number of properties available to let. According to CoreLogic, rental listings in parts of inner Sydney and Melbourne jumped more than 30% in April 2020. Rental prices have also been falling. Figures from SQM Research show that over the 12 months to mid-May 2020, rents in Sydney and Melbourne dropped by as much as 6.1% and 4.9% respectively.

This is giving renters a good chance of pocketing savings by moving to a new place. But no matter what your reasons for leaving a rental property, breaking a rental agreement early can be extremely costly. Exactly how much you’re up for depends on the type of agreement (fixed or periodic), and the lease document you signed. Here’s what you need to know.

Do you have a fixed term lease or periodic agreement?

The first step is to know if you have a fixed lease or periodic agreement. If your formal lease expired some time ago but you’ve stayed on in the property anyway, you are said to be on a month-by-month or periodic agreement. This makes it a lot easier – and cheaper – to move out. You have to give the landlord notice in writing of your intention to leave, and continue paying rent until the day you hand in the keys.

Unless your lease states otherwise, the amount of notice required for a periodic lease is set out below.

State by state periodic lease notice periods
ACT NSW NT QLD SA TAS VIC WA
21 days 21 days 14 days 14 days 21 days 14 days 28 days 21 days

A guide to the rules in each state and territory if you have a fixed term lease

The situation is very different if your formal lease has yet to run its course. If you’re still within the timeframe of the original lease, you are on a “fixed term” lease, and bailing out early can be expensive. That’s because your lease is a legally binding contract and, with limited exceptions, you’re expected to compensate the landlord for loss of rent if you leave the property ahead of schedule.

It’s important to dust off your lease to see if it specifically mentions what happens if you break the rental agreement early. If it doesn’t, take a look at the details below to understand the rules that may apply in your state or territory.

It’s worth noting that the notice periods for a fixed term lease are an absolute minimum. Ideally, give as much notice as possible. This way you give the landlord time to find a new tenant, and that can mean valuable savings on the costs you could face.

 

Source: fizkes (Shutterstock)

Australian Capital Territory

Notice required: 21 days

Check to see if your lease mentions a “break fee”. If it does, the default cost is six weeks rent if you’re less than halfway through the lease, or four weeks of rent if you’ve passed the halfway mark. If there is no break fee clause, you can be liable for up to 25 weeks of rent (or until the end of the lease) plus re-letting costs.

New South Wales

Notice required: 14 days

The cost of breaking a rental agreement early in NSW depends on when you signed the lease as new rules recently kicked in.

If you signed the lease before 23 March 2020

If your lease contains a break fee clause, you can be asked to pay six weeks of rent if you’re less than halfway through the lease term, or four weeks rent if you’re over the halfway mark.

If the lease agreement doesn’t mention a break fee, you can be up for the cost of rent until a new tenant is found, plus advertising and a letting fee.

If you signed the lease after 23 March 2020

If the lease is for less than three years, a break fee will apply. This is set at:

  • Four weeks rent if you’re less than one-quarter of the way through the lease term
  • Three weeks rent if you’re between one-quarter and halfway through the lease
  • Two weeks rent if you’re between halfway and three-quarters of the way through the lease
  • One week of rent if you’re three-quarters or more through the lease.

If your lease is for more than three years, the landlord can ask you to pay for loss of rent, advertising and a re-letting fee.

Northern Territory

Notice required: 14 days

Breaking a fixed term lease early in the Northern Territory can see you responsible for paying rent owed right up to the end date of the lease or until the place is re-tenanted. You can also be asked to pay the costs of finding a new tenant.

Queensland

Notice required: 14 days

Expect to pay the cost of rent owing right up until the fixed term ends – or until a new tenant is found, as well as the costs of re-letting and advertising. If you’re experiencing significant financial hardship, you can apply to the Queensland Civil and Administrative Tribunal for an order to terminate the lease, though you can still be ordered to compensate the landlord.

South Australia

Notice required: 28 days

Breaking a rental agreement in South Australia can see you out of pocket for loss of rent until the place is re-tenanted, plus advertising and re-letting costs. Even if the landlord decides to drop the rent to secure a new tenant quickly, you can be asked to pay the difference until the end of your lease term.

Tasmania

Notice required: 14 days

Breaking a fixed term lease can see you up for the cost of rent remaining until the end of the lease or until a new tenant is found. You can also be asked to pay advertising and re-letting expenses.

Victoria

Notice required: 28 days

You’re expected to pay the cost of rent for the remaining lease term, or until a new tenant is found, as well as advertising costs and a re-letting fee. If you’re pulling out of a long term lease spanning several years, the landlord can ask you to pay one month’s rent for every year remaining on the lease – up to a maximum of six months’ rent.

Western Australia

Notice required: 30 days

You can be asked to pay rent plus maintenance expenses on the property until either a new tenant is found or the end date of your lease rolls around.

What if you don’t pay up?

If you simply walk away from a rental property without following the rules beware this could cost you a lot more than your bond money. Your name could end up on a tenant blacklist – a database of tenants who have left a property owing more than their bond. Property managers often check tenant databases before approving rental applications, and if your name appears on one it can be very difficult to secure a new lease in the future.


Nicola FieldAbout Nicola Field

Nicola Field is a personal finance writer with nearly two decades of industry experience. A former chartered accountant with a Master of Education degree, Nicola has contributed to several popular magazines including the Australian Women’s Weekly, Money and Real Living. She has authored several best-selling family-focused finance books including Baby or Bust (Wiley) and Investing in Your Child’s Future (Wiley).

 

Main image source: Morrowind (Shutterstock)

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