Breaking a lease early

When a tenant signs a fixed term lease they are committing to stay for the full term. If circumstances change and a tenant wants to move out before the end of the fixed term, there could be potential costs involved.

Costs tenants may have to pay

If a tenant needs to end their agreement early, they should give as much notice as they can. The more a tenant can do to help, the less they may have to pay. Tenants should make it as easy as possible for the landlord or agent to show the premises to potential new tenants.

Should a tenancy agreement not include a break fee, a landlord may wish to seek compensation for financial loss due to the tenant breaking the lease term early.

These costs may include loss of rent, advertising and a letting fee (if the landlord uses an agent). If the tenant and landlord are unable to agree on the amount of compensation, the landlord may claim from the bond or apply to the NSW Civil and Administrative Tribunal (the Tribunal).

Tenants should be aware that if they owe more money than the bond, their name could be listed on a tenancy database. These listings can make it difficult to rent again elsewhere.

Break fee

The break fee is a penalty a tenant agrees to pay if they move out before the end of the fixed term.

If the fixed term of the agreement is for three years or less the break fee is:

  • six weeks rent if the tenant moves out in the first half of the fixed term
  • four weeks rent if the tenant moves out in the second half of the fixed term.

If the fixed term is for more than three years and the tenant and landlord agree to include a break fee clause, they can agree on the amount and write it into the agreement.

If the tenancy agreement does not include a break fee, a landlord may still seek compensation by applying to the Tribunal. These costs may include loss of rent, advertising and a letting fee if the landlord uses an agent. If the tenant and landlord are unable to agree on the amount of compensation, the landlord may claim from the bond or apply to the Tribunal.

Breach by the landlord

If the landlord is not complying with the terms of the tenancy agreement, the tenant may be able to end their lease early without penalty.

If a tenant thinks the breach is serious enough to justify ending the tenancy, they can give 14 days’ written termination notice to the landlord. If the landlord disagrees, they can apply to the Tribunal.

Alternatively, the tenant can apply to the Tribunal without giving notice. The Tribunal can refuse to make an order if the landlord remedies the breach. If the tenant has already moved out, they may have to pay the costs of breaking the lease.

Breaking the agreement without penalty

In limited circumstances, a tenant can break the agreement early without penalty. A tenant can give 14 days’ written notice to end an agreement early if:

  • they have accepted an offer of social housing (eg. from Housing NSW)
  • they need to move into an aged care facility or nursing home (not a retirement village)
  • the landlord has put the premises on the market for sale, and they were not told before signing the lease that the property would be sold.

A tenant can give 21 days’ written notice to end an agreement early if:

  • they have a fixed term agreement of more than 2 years and they have been given a rent increase notice, or
  • their co-tenant passes away.

If a tenant gives notice for any of these reasons, they do not have to pay compensation. A tenant is only liable for the rent until the notice ends and they hand back possession of the premises.

Mutual consent

If the landlord and tenant both agree, any tenancy agreement can be terminated at any time.

Ending the lease early because of domestic violence

Tenants who need to escape their home in circumstances of domestic violence can end their tenancy immediately and without penalty.

To end the tenancy in circumstances of domestic violence, the tenant will need to give their landlord or agent a domestic violence termination notice and attach one of the following permitted forms of evidence:

  • certificate of conviction for the domestic violence offence
  • family law injunction
  • provisional, interim or final Domestic Violence Order
  • declaration made by a medical practitioner in the prescribed form.

The tenant will also need to give each co-tenant a domestic violence termination notice. Supporting evidence does not need to be given to a co-tenant, only to a landlord or agent.

A domestic violence termination notice does not need to be given in person.

Download the domestic violence declaration form – for tenants

Download the domestic violence declaration form – for a tenant’s dependent child

Download a sample domestic violence rental termination notice for co-tenants

Download a sample domestic violence rental termination notice for landlords

Hardship

If staying in the premises until the end of the fixed term would cause the tenant undue hardship, they can apply to the Tribunal to end the lease early. A tenant can ask for an urgent hearing but will need to keep paying the rent.

The tenant will need to prove that their hardship is severe and serious and did not exist when they signed the lease. If the Tribunal agrees that the tenancy can end early, penalties may still occur.

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