Sometimes, renters will experience hardship which will cause them to have to break their lease. If you want to break your lease early you can do so, however, you may be asked to pay ‘lease break’ costs which can often be expensive.
While it’s best to avoid breaking your tenancy agreement, sometimes situations arise where there is no alternative. This could be due to illness, job loss or relocation, or something completely out of your control.
The good news is that there are options available to you if you need to break a lease early. In this guide, we will explore how to break a lease and minimise costs to make the process as smooth as possible for all involved.
Can you break a lease early?
Many people may ask whether you can break a lease early and the answer is yes, you can. Ending your agreement early is usually done by giving the rental provider (landlord) written notice of your intention to vacate. In this circumstance, there’s no minimum notice period but it is best if you can provide as much notice as possible prior to your intended vacate date. You can also break your lease without notice. In this case, renters don’t have to pay a penalty for breaking the agreement but they will have to cover certain costs so the rental provider doesn’t lose money when the agreement is broken. Oftentimes, your rental agreement will outline the fees associated with breaking a lease. The cost you have to pay will depend on the type of rental agreement you have and the costs the rental provider has paid.
Some deciding factors in breaking a lease early include:
- The reason for breaking the lease early (e.g, hardship, illness, etc.)
- The laws in the state where you live
- The type of tenancy agreement you have
- The agreement between you and your rental provider
Whatever causes you to break your lease early, it’s important to remain open and cooperative with your landlord to avoid leaving on bad terms. This is even more important if you’re a first-time renter.
What happens if you break a lease?
Breaking a lease early means you are leaving your tenancy agreement before the agreed-upon length of tenancy. Since a tenancy agreement is a legally binding document, breaking it early will mean compensation will probably need to be paid.
In some circumstances, you can end your fixed-term rental agreement (lease) before it finishes without paying ‘lease break’ costs. For example, in Victoria, you can visit the VCAT website and end your agreement early if you are experiencing family or personal violence, without having to pay ‘lease break costs’.
How to break a lease without penalty
If you have decided to end your tenancy agreement, the following steps can help you to avoid penalty:
1. Understand your rights as a tenant
Many leases have strict penalties for breaking the lease early, and it's important to know what you're getting into before making any decisions. By understanding your rights as a tenant, you can negotiate with your landlord and make informed decisions about how to proceed.
Visit your local Tenant’s Union website for advice if you’re unsure of how to proceed with breaking your lease early. This will allow you to be armed with the right knowledge and will help minimise any surprise costs.
2. Check for a legal cause to end your lease early
There are a number of legally specified reasons for terminating a lease, which can vary from state to state. Generally, the following reasons can provide you legal cause to break your lease early:
- Undue financial hardship
- If the property has become uninhabitable
- If the landlord breaches the tenancy agreement
- Domestic violence
- Death of a sole tenant
Depending on your state, you won’t have to pay any costs if you leave early for the above reasons. It will be up to your local civil and administrative tribunal whether you meet severe hardship circumstances or not.
3. Give notice to terminate your tenancy agreement
If you can’t or don’t apply for early termination via your local tribunal, then you will need to provide a Notice to Terminate a Tenancy Agreement to your landlord. You can find these forms online. It should include the following:
Your name and address as well as your landlord’s name and address
The date of your writing
The number of days' notice and the day you’re moving out
Your signature
4. Cover any costs of breaking the lease early
If you do have to cover the costs of breaking your lease, make sure you do so as soon as you can. Depending on your agreement, these costs may include paying rent up until a new tenant moves in, the costs of advertising the property, letting fees, or break fees. You may even need to help your landlord find a new tenant or find someone to sublet from you – which might reduce the costs that come with breaking your lease early.
In Australia, the cost of breaking a lease will be either: six weeks' rent if the tenant leaves in the first half of the fixed-term agreement, or four weeks’ rent if the tenant leaves in the second half of the fixed-term agreement.
5. Moving out
On your move-out date, you are expected to hand over the keys to the property and leave the property in the same condition as when you moved in. You are also responsible for ensuring all your belongings are removed from the property.
With over 90 years of experience, we know what it's like
Sometimes, breaking a lease early is unavoidable. Thankfully, there are options to end your lease agreement without having to pay any penalties or fees. This occurs when you can prove undue hardship. For others, ending your agreement early will mean having to pay fees – which will wholly depend on your agreement with your landlord. Unfortunately, if you break your lease early it will be possible for future landlords to know this through your records/rental history. However, in most cases, this will not affect your credit if you have a strong rental history and good references.
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