Uncertainty and unforeseen circumstances can make people take drastic measures. It includes leaving their secure jobs for a new career or moving to another city or suburb without completing their lease terms. These sudden and alarming changes can affect many people, especially when you decide to move unexpectedly. Since rental agreements are binding contracts, ending them midway can be challenging. However, it can be planned carefully and made to work in the tenant’s favour.
Breaking a fixed-term lease before the end of the term incurs a lease-break cost, which the tenant pays to compensate for the landlord's loss. In some cases, this cost can be waived or reduced if both parties agree to the arrangement. However, no lease-break cost is involved if the tenant ends a periodic lease after completing a fixed-term lease.
Let us help you understand how to break a rental lease in Melbourne, VIC. This information will help tenants understand their rights and responsibilities when they plan to end the lease before its term.
1. Breaking A Rental Lease in Melbourne
When the tenant intends to end the lease before its term, they must be prepared to pay the lease-break costs. As per the Residential Tenancies Act 1997, the lease can be ended when the landlord and the tenant mutually agree to the arrangement. In this case the tenant can move out without serving a notice to vacate the property and paying the lease-break cost. The tenant must get the consent of the rental provider in writing, and they should sign it.
When the move is not mutually agreed upon, the tenant must provide a notice of intention to vacate. This notice must be written and provided to the rental provider with the date of moving out. It must clearly inform about the notice period, and the tenant is obligated to complete it. If the tenant moves out before the end of the notice period, they will still have to pay the rent for the entire period.
2. Breaking the Rental Lease With Costs
When the rental provider insists on paying the lease-break costs, the tenants have to bear the compensation. The cost includes a reletting fee, which is two weeks’ rent, an advertising fee for finding new tenants, and rent until the end of the fixed term or until a new tenant moves into the property, whichever comes first. The reletting and advertising costs are based on the amount of time left on the fixed-term agreement. For example, if six months are left of a 12-month lease, the cost will be 50% of the reletting and advertising fee.
Tenants should also bear in mind the cost of hiring end of lease cleaning in Melbourne professionals to leave the property reasonably clean. Otherwise, the rental provider can claim the bond, which can add to the expense of breaking the lease. Remember that the rent has to be paid only until the end date of the fixed-term lease. The tenant and the rental provider must make efforts to minimise these costs.
3. Breaking the Rental Lease Without Costs
Tenants can break the fixed-term lease without paying the lease-break costs in some situations, such as when both parties mutually agree to the termination of the lease and the landlord waives the costs. The agreement can be ended immediately by the tenant if they are facing domestic violence by applying to the Victorian Civil and Administrative Tribunal (VCAT).
They can also apply to the tribunal if they are facing unexpected hardships. They can ask for a waiver of the lease-break cost because of the problem at hand. Tenants can evade the costs if they transfer the lease to a new tenant. However, this requires the consent of the landlord or an order from the VCAT. The outgoing tenant will bear the cost of finding the new tenant and transferring the lease. In addition, the rental provider can ask for compensation for costs incurred due to the transfer.
4. Breaking the Lease because of the Landlord
The tenant has the right to break the rental lease if the landlord intends to sell the property and sends a notice of intention to sell without informing about this plan before signing the lease. In this case, the tenant does not have to pay the lease-break costs. The tenant can also provide a notice of intention to vacate even before moving into the rental property if it appears to be unfit for habitation.
Usually, these properties are damaged or dirty and need professional end of lease cleaning Melbourne to make them ready for living. The notice can also be sent after moving into the property and realising it is unfit for living because of structural damage or any other problem. The landlord can apply to the VCAT in this case and the tribunal will then decide if it is fit for living or not and if the tenant has to be paid back overpaid rent.
5. Landlord Breaches the Agreement
The tenant is entitled to break the lease if the landlord breaches the agreement and does not rectify even after the tenant sends breach notices. The lease can also be ended if the rental provider does not comply with the VCAT orders. An example of a breach can be not getting the property cleaned by professional end of lease cleaning Melbourne experts before the tenants move in or not repairing damage.
For most issues, the time allowed to fix the breach is 14 days, except for the breach of quiet enjoyment, which the landlord must fix within 7 days. The tenant can apply to VCAT or send breach notices to the landlord. They can break the lease if the problem is not fixed even after sending three notices.
Breaking A Rental Lease In Melbourne
Wrapping Up
Breaking the lease is usually the last resort when things do not work out as planned by the tenants. They must know their rights and duties and comply with the obligations to ensure a hassle-free move before the end of the lease term.