How to end a fixed-term lease early

Terminating a fixed-term lease can be a costly decision but, whatever your reasons for doing so, experts say the No.1 rule is to give plenty of notice of your intention to vacate.

The first step is to put in writing your plans to break your lease as soon as possible to help minimise disruption between the old and new tenant, according to Stone Real Estate ACT property management director Amanda Tehle.

“Gone are the days when you had to try to find someone to take your place,” she said. “It’s still important for agents out there to try to find the best possible tenant for their owners, too. That’s what we are here for.”

In almost every Australian state other than NSW, the typical penalty for tenants breaking a lease is to reimburse their landlord for any expenses incurred as a result of the break lease, including any loss of rent, Raine and Horne property management national manager Maria Milillo said.

“It’s pretty much that way in every state apart from NSW,” she said. “They’re the only state where the determination of the amount of money you pay is fixed. So if you have, for example, 75 per cent of your lease still pending then you must pay four weeks rent.”

However, Ms Milillo said her advice would always be that a tenant checks their lease agreement, as well as the governing body websites for information, because the length and terms of leases in some states could vary.

Readvertising the property for rent is a common cost for tenants choosing to vacate early, as well as a letting fee, which could be between one to two weeks’ rent.

“For anyone facing financial hardship, they should make sure they’ve researched and are completely aware of all the support that’s available first before they go down this road because it could be quite costly,” Ms Milillo said.

“Depending on the financial position of the landlord, some are able to be fairly generous and really support tenants but not every landlord is in that position, as they too could be affected financially. So, that’s why communication is really key.”

Belle Property head of property management and escapes Melinda Cotton said tenants considering breaking their lease should carefully consider their decision.

“It’s not always wise to go to a higher rental property,” she said. “Tenants think, ‘Yes, I can afford to do it’, but don’t take into account if something were to happen.”

“Be careful about your reasons for moving into a property and give yourself a little wiggle room, financially.”

State by state guide to breaking a lease

ACT Tenants in the first half of a tenancy agreement will incur a maximum fee of six weeks’ rent, and if the agreement is in the second half, it’s a maximum of four weeks’ rent.

“The penalty, though, can be shortened if we find a tenant in, say, week three of that six-week period. You would only pay up to the day prior to the new tenant starting,” said Ms Tehle.

If a new tenant moves in during that period, landlords may charge administrative costs, such as advertising fees, from the vacating tenant up to a maximum of one week’s rent.

In certain circumstances, such as financial hardship, where a court has made a protection order, where a tenant has accepted a social housing or aged-care place, or where a tenant has been posted away from Canberra for work, tenants may terminate leases without paying compensation.

Minimum notice periods depend on the reason for terminating the fixed agreement.

Western Australia Tenants who terminate a fixed lease early may have to pay rent or other reasonable costs (such as advertising) incurred by the landlord until a new tenant is found or the original tenancy period expires.

Tenants affected by family violence may terminate a tenancy agreement with seven days’ notice.

Fixed leases can also be ended by mutual agreement without penalty or the need to issue notices. Both the landlord and tenant need to agree, in writing, that the tenancy agreement should end on a specified date, and both parties must sign a clear, written statement to this effect.

Tasmania Tenants may end a lease by giving the landlord or agent 14 days’ notice if the owner has not done something the lease says they must do, has done something the lease says they must not do, or has not done repairs within the required timeframe.

If a tenant breaks a lease before the end date without proper reasons or a notice to terminate, they are responsible for paying rent until a new lease starts or until the end date of the lease, whichever happens first.

The owner must make reasonable attempts to try to find a new tenant, and the tenant will have to pay any advertising costs charged to the owner.

Northern Territory Tenants who break a fixed-term lease will be liable to pay the loss of rent for the remainder of the lease or until the property is re-let, and may also have to pay fees such as advertising costs to the real estate agent.

Tenants should give landlords or agents as much notice as possible to arrange a new tenant before their departure date.

South Australia Tenants who break a fixed-term lease are responsible for costs related to re-letting the property.

Landlords can claim loss of rent until the property is re-let, as well as advertising and re-letting fees charged to the landlord by an agent.

Formulas developed by the South Australian Civil and Administrative Tribunal (SACAT) must be applied to all advertising and re-letting costs. If the tenant breaks the lease in the first quarter of their lease term, full costs can be claimed.

If landlords need to reduce rent to re-let the property quickly, they can claim the difference from the tenant until the date their lease ends. If the property is re-let at a higher rent, the landlord is profiting from the lease break, and tenants can expect the profit to be offset against the landlord’s loss of rent, advertising and re-letting fee.

Queensland Tenants who break a fixed-term lease may need to compensate the owner or property manager for costs incurred. These include rent until a new tenant is found or until the end date of the agreement, as well as reasonable re-letting costs (usually one week’s rent plus GST) and advertising costs. Owners and property managers must mitigate any losses.

Tenants experiencing excessive hardship may make an urgent application to QCAT for an order terminating the agreement, however, QCAT may still order compensation to be paid.


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