So you rent a property in Qld Australia and for whatever reason, you need now to break your lease and wondering what’s involve.
Below is a breakdown of what a break lease means, the process and possible costs you may insure.
FIRST, WHAT IS A BREAK LEASE?
A break lease is when you are in a signed lease that has a lease end date but you need to vacate the property before that lease end date.
If you are on a periodic lease, you only need to give 14 days’ notice and you can leave. You are not breaking a lease, just giving your obligated 14 days’ notice. You can read more about periodic leases in a previous article of mine here.
Keep in mind a lease is a legally binding contract that a tenant is commit to honour. The main idea of a lease is to protect both the tenant and the landlord. The tenant knows they have a place to call home for the set period & the landlord knows they have a tenant for the same time frame, so it’s a win win.
We refer these as Leases but the official name is General Tenancy Agreement or GTA. On your signed Form 18a General Tenancy Agreement Page 1 Item 6 you will see your lease start and end date. You can see what Form 18 looks like here ion the RTA site.
IF YOU NEED TO BREAK LEASE HOW MUCH NOTICE DO YOU NEED TO GIVE?
That’s really up to you, but give as much notice as possible. The more notice you give the more time the property manager or landlord has time to find a new tenant. We find that we need around 2 weeks to find a new tenant that qualifies, but it also depends on the time of year and it may take over 4 weeks to do this so you need to move fast because the tenant breaking the lease still has to pay the rent until the new tenant takes over and that can add up to a lot of money.
TOP 3 MAIN REASONS TENANT BREAK A LEASE
1. BUYING THEIR OWN PROPERTY
Many tenants don’t want to rent forever, so have been saving for some time to be able to find there forever home. Often they will finally have their savings in order, but then the search for what they would like to buy can take months, so they are not really sure when this will happen or what date they will settle on the purchase of their new home.
Here in Qld once they do make an offer that’s accepted it’s usually just 30 days until they settle. They also need to have finance approved. So it’s best to not give notice you are leaving until finance is approved. Which takes around 14 to 21 days. My advice though is to get a pre-approval from a bank this way you can make an offer knowing your finance will be approved. But also allows you to give notice a little sooner too. You can read here about getting a pre approval.
2. RELATIONSHIP SEPARATION
Unfortunately, people break up. Often one partner will move out. But they have signed a lease which is a legally binding agreement, so they are still liable for the rent. Either the tenant who stays needs to cover the cost of the rent or both parties need to leave.
If one is staying a new lease needs to be sign to remove the vacating partner from the lease and legal obligation. It’s very common for one to stay and get a housemate. But you need to realise this house mate needs to be an approved applicant by the property manager or landlord.
3. JOB TRANSFER
Congratulations. Sometimes people get promoted or an opportunity to work in the big smoke. It’s something they have not planned for or expected. But it’s an opportunity they can’t miss out on. So off they go to improve their career. Of course, this transfer has set end and start dates. Usually, 4 to 8 weeks notice is given by who they work for. Which is ample time to give the property manager or landlord notice so a plan can be made.
Of course there are other reasons for a tenant to need to break lease but the above are the top 3 most common that we see.
WHAT WILL A BREAK LEASE COST A TENANT?
1. Rent. The tenant needs to continue to pay the weekly rent until a new tenant is find. So if the new tenant is moving in on say the 20th, the tenant breaking the lease needs to pay rent until the 19th.
2. Break Lease Fee. There is a cost the tenant needs to pay the property manager for finding a new tenant, processing applications, preparing the lease, doing an exit and entry report. This is usually 1 week’s rent plus GST. So if you are renting a home for $500 PW, the break lease fee will be $550 inc GST.
3. Marketing. Some agencies will also charge a fee for marketing. Our fee is $165, because this is what it costs us to advertise on realestate.com.au where most of our tenant enquiries come from.
4. Compensation. Above I mentioned you need to pay rent until the day the new tenant moves in. But this is usually a combination of rent until the last day you move out and then any additional days is classed as compensation, since you are no longer residing at the property. This is usually equal to the rent that you pay weekly, that you need to continue to pay from the day you vacate until the day the new tenant moves in. It’s not practical for you to move out on a Thursday and have the new tenant move in on a Friday. Your landlord or property manager needs to prepare the property and if the vacating tenant needs to go back this can take a few days to get finalised.
Keep in mind the tenant will also have other costs too, like moving costs, cleaning costs, pest spray, carpet cleaning etc.
WHY ARE THERE FEES FOR BREAKING A LEASE?
There is a real cost that the property manager will ensure for finding a new tenant. Ads have to be placed. tenants call to enquire, tenants email email to enquire, tenants have to be shown the property, applications have to be processed. Its a very time consuming thing. Then a lease is drawn up. An exit report done, an entry report done. Bond refunded, bond collected. The list goes on. On top of all this a lease is a legally binding contract and their a penalties if this agreement is broken, Otherwise there would be little reason to have a lease at all. So yes if you a breaking a lease you need to take it on the chin that you will incure some costs.
WHEN SHOULD YOUR PROPERTY MANAGER START TO ADVERTISE FOR A NEW TENANT?
We like to advertise at about 5 weeks prior to a vacate date, so don’t leave it too late because if you move out and a tenant has not been found you will still be liable for the rent.
WHAT CAN YOU DO TO HELP WITH FINDING A NEW TENANT?
Lots. First, clean up. Make the home look lovely. But you can also do your own advertising. Put it on Gum Tree, Facebook Marketplace and any other social sites. Of course, if you find someone yourself they will need to fill out a rental application and be approved. You can read some ideas of finding a replacement tenant here in a previous article I have written.
GIVING THE CORRECT NOTICE
While I am sure you will call or email your property manager with the news you are leaving, it’s not enough. You need to follow legislation, by completing a Form 13 Notice of Intention to leave. This is the legal document that state the last day you will occupy the property. So your landlord or property manager has a clear date when it will be available for the new tenant to move in.
WHAT DO YOU NEED TO DO BEFORE YOU MOVE OUT?
It’s the same process as if you are vacating at an end of lease. You need to clean up and prepare to the property to be in the same condition as when you moved in, less fair wear and tear. Many tenant’s under estimate what that means so here is a small guide.
- Clean – Either do this yourself and do a very very good job or get a bond cleaner in.
- Gardens – remove all the weeds, including the ones in the lawn. TIP: start this 4 weeks before you leave as it will take weeks for the weeds to die if you spray them and you will miss some the first time too.
You can also read a far more detailed article about this I have written here about how to get your bond back.
WHAT IF YOUR LANDLORD OR PROPERTY MANAGER CAN’T FIND A TENANT?
Remember, you are on the hook to keep paying rent until a tenant is found and they start to pay the rent. But your property manager or landlord needs to help you out and work as hard as they can to find a new tenant, fast. If it’s been 14 days and they have now shown the property to too many tenants you need to be concerned and ask them why. I suggest you also do your own research, is it online, is it on realestate.com.au. Do they have good photos, copy, floor plan, are they advertising any open homes?
But just as importantly, when they do show a potential tenant, you need to do your part and present the home as best you can, it all helps.
CAN THE RENT BE ADVERTISED FOR MORE?
Yes. If the market has improved the property manager can now advertise the property for more. But they are not permit to increase it to a level where the tenant breaking the lease will be put at a disadvantage. So for example if a tenant is paying $500 per week and the property manager re advises for $600 PW and after a week no one is interested. The property manager can’t do this. As it disadvantages the leaving tenant. But if the property manger does this and within the first week has lots of interest. Some applications and a possible suitable tenant then yes the property manager can do this.
If at 14 days no tenants have looked you can take things into your own hands, place an ad on Gumtree and Facebook marketplace. Ask some friends too. While it’s fine you do what you can to find a tenant. If anyone is attentive they still need to apply and be approve by the property manager and landlord. So knock yourself out.
WHAT IF YOU MOVE OUT AND JUST STOP PAYING RENT?
Well first, please don’t. That’s just not ethical. You need to realise you’ve signed a legally binding contract, that needs to be honoured.
Some tenants ask that rent and other small things be taken from their bond, but that’s not a great idea. because when a rental reference is done we always like to see bond was refunded in full. So not getting all your bond back will impact your ability to rent in the future.
CAN THE NEW TENANT MOVE IN THE DAY AFTER I MOVE OUT?
Unfortunately no. Your property manager needs to do your exit condition report. If issues are found you need an opportunity to fix them. Then once done your property manager needs to do the entry condition report. So that’s about 48 hours at least.
I realise as a tenant you’d be wondering why it can’t just be rushed through. But I have seen this a few times and it never ends well. There is a process that needs to be followed.
Unfortunately for the tenant breaking the lease this is where the compensation part comes in where you might have left but you still need to know to pay the owner compensation for the days the property manager needs to do all the checks. To minimise this work with the property manager leading up to this date to ensure the property is perfect for the exit report.
SO IN CONCLUSION
- Yes you will incur fees although they should be small
- You need to supply a notice of intention to leave
- You are responsible for rent, marketing and compensation until a tenant moves in