Can I Break My Lease?

There are lots of reasons you might want to break your lease. Maybe you’ve bought property. Maybe you’re moving in with your partner. Maybe you’ve found a better deal. Maybe you’re moving to a new suburb for work. Whatever your situation, this is what you should know.

What is a Lease?

Simply speaking, a lease is a type of contract. When you sign it, you promise the landlord you’ll stay there for a specified period of time and pay a specified amount of money. Lease documents are designed to cover lots of potential issues that can arise during the rental period. For example, what happens if the property needs urgent repairs? What happens if the tenant causes damage? Who pays the council rates? What happens if the property is sold?

What are the rules about ending a lease early?

Leases typically include a clause setting out what happens if you want to get out of it early. This is something that landlords and tenants can negotiate between themselves. However, NSW Fair Trading publishes a standard lease agreement online which provides a solid foundation.

Here’s an example of what this kind of clause might look like:

Clause 51: The tenant agrees that, if the tenant ends the residential tenancy agreement before the end of the fixed term of the agreement, the tenant must pay a break fee of the following amount if the fixed term is not more than three years:

1. 4 weeks’ rent if less than 25% of the fixed term has expired
2. 3 weeks’ rent if 25% or more but less than 50% of the fixed term has expired
3. 2 weeks’ rent if 50% or more but less than 75% of the fixed term has expired
4. 1 week’s rent if 75% or more of the fixed term has expired.

To answer the question we started with – yes, you can break your lease.

What happens after I break my lease early?

If you want to end your lease early, you’ll need to notify your landlord. Usually, an email is sufficient, but double-check your lease document in case you are required to write a letter. Once that happens, you will generally be required to pay a “break fee”. This is a small sum that ensures the landlord’s expenses are covered until they can find someone to replace you.

There are different rules depending on whether your lease was longer or shorter than three years. If it’s longer than three years, the landlord might be able to seek additional compensation (on top of what is set out above) by making an application to the NSW Civil and Administrative Tribunal. This typically considers costs such as loss of rent, advertising costs, and agent fees.

What if I’m breaking my lease due to hardship?

The law does provide exceptions for people who are suffering hardship. For example, if a tenant accepts an offer of social housing, needs to move into an aged care facility or nursing home, if asbestos is discovered inside the home, or the tenant is fleeing domestic violence. Generally, in these situations, the tenant will be required to pay rent until they hand back the keys, but they won’t have to pay a break fee. You can learn more about this on the NSW Fair Trading website.

If you have concerns with your lease and would like to discuss your concerns with one of our Commercial Team, please contact us on 8525 2700 or click here to request an appointment with one of our experienced Solicitors.

Article and image by Lawfully Explained