My Tenant Wants to Break the Lease – Now What? Don’t Act Until You Read This

Something has changed in the life of your tenant and they now need to move out sooner than their fixed term tenancy ends. What are your options? How do you handle the situation without incurring any unjust losses for yourself when you should have had regular rent coming in until the end of the tenancy?

Neither party can end a fixed term tenancy early by notice.*

The only way to end a fixed term tenancy early is by mutual agreement and neither party has to agree.

As landlord it is likely that, if your tenant wants out of a fixed term tenancy and you don’t allow it they will either start treating the property poorly or abandon it and stop paying rent.

So what do you do?

Firstly: Don’t agree to anything if speaking with them, tell them you will think about it and get back to them in writing in [timeframe]

You want to be setting the terms here and you don’t want to accidently agree in passing to something the tenant suggest such as I’ll be out on this date. Don’t “yes” or “no” and be careful to not accidently ‘yeah’ as in I’m listening, which they may take as a yes I agree to your final date.

We believe a fair and reasonable term for tenants breaking lease to be:

The tenant will pay for costs to find new tenants – an advertising fee and an admin fee (if any)

The tenant will allow reasonable access (at least 2 x 15 minute viewings per week during working hours) for photos/viewings and that they will present the property in a clean and tidy manner

The tenant will continue to pay the rent up until a suitable tenant has been found and their lease begins, even if they move out earlier

All meaning the landlord suffers no financial loss as a result of tenant/s breaking lease early.

What about the other way around? What if you need the property vacant for any reason?

As with tenants breaking lease, if on a fixed term tenancy break lease can only be done by mutual agreement. In the case where the landlord needs the property back you will likely have to sweeten the deal with cash towards moving costs and possibly a couple of free or heavily discounted weeks of rent.

Again – any agreement must be crystal clear and in writing. You don’t want to have paid the tenants some cash towards moving costs then have them turn around and say actually, they are very comfortable and don’t want to leave – thanks for the cash though.

Everything needs to be in writing with no room for misunderstanding such as:

The tenant agrees the tenancy is to end early on the new vacate date of: XXXXX

In compensation for the expenses incurred by the tenant for moving early the landlords will make a payment of $X to the tenants on X date (or vacate date).

In compensation for the expenses to be incurred by the tenant for moving early the landlords will adjust the rent from $X to $X. The first payment of this new amount will be on X date.

A normal exit is to take place with the property being left in reasonably clean and tidy condition, bond being withheld for any repairs or extra cleaning required.

The rest of the terms of the tenancy agreement continue to valid up to the new lease end date.

*Special circumstances such as financial hardship or unliveable conditions may be excuses to end tenancies early with no penalty to tenants.

Very good luck to you!

Disclaimer: The information contained in this publication is exclusively for promotional purposes and is not to be relied upon for legal or contractual dealings. Tenant Source recommends you seek independent legal advice, and that you may need to seek technical or other advice and information prior to making any actions in regards to tenancies in your investment properties. Tenant Source Ltd including its staff and directors accepts no responsibility for any issues arising as a result of taking advice from this publication.