There are two reasons a tenant can seek to end a fixed term lease before the end date:
By the choice/circumstance of the tenant = BREAKING THE LEASE
Through a fault of the landlord/ agent = TERMINATING THE LEASE
AGREEMENT TO END LEASE
A tenant may be able to negotiate a no fault termination of the agreement with their landlord/agent. This agreement should be in writing and state dates, agreed terms and any financial obligation, such as rent or advertising expenses.
A tenant who is on a non-fixed term lease (no end date) can use the Notice to Terminate to end their lease with a minimum 14 days notice.
BREAKING THE LEASE
When a tenant must break their lease before the end date due to financial, family, relationship, work or other issues, then both the tenant and the agent/landlord have a “duty to mitigate loss”. This means that both parties need to keep any financial losses to a minimum. Under the Act if a tenant on a fixed term lease wishes to leave before the end of the lease, then they are responsible for the rent until the end of the lease, or until a new person is found to take on a lease for the property.
The landlord/agent should be informed in writing as soon as possible of the need to break the lease.
It is important to understand that a vacating tenant is only responsible for any fees and advertising on a pro-rata basis. This means that if there is 3 months left on a 12 month lease, only a quarter of the fees can be charged, because there is only a quarter of the lease to go.
An agent/landlord can not charge a break lease fee and any charges such as advertising must be clearly itemised. A landlord/agent cannot financially profit from costs involved in breaking a lease.
The landlord/agent must take all reasonable steps to find a new tenant. These reasonable steps should include offering the property for the same rent and the same conditions as the current lease. The vacating tenant is responsible for all reasonable costs involved in finding a new tenant. A tenant may want to check that the property is being advertised sufficiently, and at the same rent and conditions.
REDUCING COSTS by
FINDING A NEW TENANT
One way to reduce the landlord’s costs is for the current tenant to seek prospective tenants using their own networks, as this may save the landlord/agent time and money, if done prior to the landlord/agent commencing their own advertising. We suggest the landlord/agent is provided with the details of four suitable potential tenants. This should be followed up to find out if anyone has been accepted and if not, why not.
Finding a Suitable Tenant
To provide the landlord/agent with a list of suitable prospective tenants, be sure they are asked a range of qualifying questions such as:
- Can they afford the rent and bond?
- Do they have bad debts? (the landlord/agent may want to run a credit check).
- How many people would live in the property?
- Are they able to fulfil all of the specific lease requirements or conditions such as; pet clauses, smoking, gardening, etc.
- Do they have tenancy references?
- When will they be able to move in?
TERMINATING THE LEASE
Tenants can only terminate their lease (using a Notice to Terminate) for the following reasons:
- The landlord/agent has failed to carry out repairs (that are not the tenant’s fault) within the time prescribed under the Act or Lease.
- The landlord/agent has breached other provisions of the Residential Tenancy Act or the Lease.
Tenants must give 14 clear days* notice (except for boarding premises where it is 2 clear days). During this time rent is still due.
In the case of repairs, if a landlord/agent fixes the problem during the notice period, the tenant may still terminate the agreement at the end of the notice period.
In all other breaches, if the landlord/agent fixes the problem within the notice period, then the Notice to Terminate is of no effect and the lease continues.
When a valid Notice to Terminate is served, the tenant only has to continue paying rent until the notice takes effect, regardless of whether a new tenant is found.
COMPLETING A VALID NOTICE
Often a landlord/agent will dispute a Notice to Terminate. To ensure a notice complies with all regulations contact the Tenant’s Union and they can assist tenants to complete a valid notice which will stand up to scrutiny.
A Notice to Terminate must include:
- Date of service of the Notice
- Landlord/Agent name/s
- Tenant name/s
- Premises to which the Notice applies
- Specific Reason/s for the Notice – be detailed in this section, e.g. if the issue is failure to carry out a repair, describe the required repairs and steps taken to have it rectified.
- Date that the Notice takes effect – a minimum of 14 clear days*.
The Tenant’s Union Notice to Terminate pro-forma, can be used.
When breaking a lease, or serving a Notice to Terminate it is vital to keep a copy of the notice and any correspondence which follows the notice.
*Clear Days refers to complete 24 hour periods from Midnight to Midnight. Example, if a notice is served at 11am or 4pm one day, the first ‘clear day’ of that notice does not begin until Midnight that evening.
DISCLAIMER: The information on this website is not legal advice. It is intended as a guide only. It applies only to legislation current in Tasmania as at 15 September 2015. For information regarding a specific tenancy problem please phone the Tenants’ Union on 1300 652 641 or (03) 6223 2641. The Tenants’ Union of Tasmania Inc. accepts no responsibility for actions based on this information, nor for actions based on electronic translations of this.