How to reduce your costs if you break a lease
There are many reasons why you might want to move out before the end of a lease. For example, you're moving overseas or you can no longer afford the rent.
If you want to break your lease before it's due to end in Victoria, you may have to pay costs. We explain how you can keep them to a minimum.
When you may have to pay costs for breaking a lease
Generally, if you break a lease early you may have to cover your landlord's out of pocket expenses. This could include costs such as:
- the agent's re-letting fee
- reasonable advertising costs, and
- covering rent until the new tenant’s lease begins or the term of your lease ends, whichever happens first.
Your landlord must keep costs to a minimum by trying to get new tenants in as soon as possible. The Tenants Union of Victoria suggests checking rental listings online to see whether your landlord or agent is doing this.
When you might not have to pay costs
In some circumstances you may not have to pay lease-break compensation to your landlord.
The property is destroyed and is unsafe or unfit to live in
If the property is partly or completely destroyed, and it’s unsafe or unfit to live in, you or your landlord can give notice terminating the lease immediately. If this happens, you are not breaking the lease and the landlord is not entitled to lease-break compensation. To prove the condition of the property, it is usually a good idea to get a report from an architect, builder or local council.
If the property you live in needs urgent repairs, you cannot terminate a lease immediately. You have to contact your landlord or agent and they must respond without delay. If they don't then there are a number of steps you need to take.
Financial hardship or family violence
If you can no longer afford to stay in your property – for example you lose your job – you can apply to VCAT to have the term of your lease reduced. This is called claiming severe 'hardship’. You will need to provide evidence of the hardship – for example, bank statements.
You can also apply to VCAT to end your lease early on severe hardship grounds in certain family violence situations. Find out more about claiming on family violence grounds on the Consumer Affairs Victoria website.
How to reduce the costs of breaking a lease
Here are some ways that you could reduce the costs you have to pay.
See if you and your landlord can agree to end the lease early
It's worthwhile talking to your landlord and seeing whether you can agree to end your lease early instead of breaking it. If you can, you may be able to negotiate lower compensation costs or avoid any costs at all. Make sure you keep all of your communication with your landlord or agent in writing.
Find someone else to move in (assigning the lease)
If your landlord agrees in writing, you can organise for a new tenant to move in and take over your lease. This could help you save costs such as re-letting fees and advertising costs, and you may be able to find a new tenant quicker than the agent or landlord. It's important to know that your landlord or agent cannot unreasonably refuse new tenants.
If you find a tenant to take over your lease with your landlord’s approval, you can organise for the bond to be transferred into their name and have them pay you the bond. You can do this by completing a Tenant Transfer form.
It's up to you to arrange payment of the bond. Find out more about transferring your bond on the Consumer Affairs Victoria website.
Can you get your bond back if you break a lease?
If you break your lease, you should still try to reach an agreement with the landlord about how to divide up the bond.
If you can agree, then you can make a joint application to the Residential Tenancies Bond Authority for the bond to be refunded. If you can’t reach an agreement, the landlord may apply to VCAT for the bond within 10 business days after you vacate the property.
The bond relates to the condition of the property – it’s not designed to cover the costs a landlord has suffered because of a tenant breaking a lease. So your landlord is not automatically entitled to have these kinds of costs met out of the bond. But this is possible if that was the arrangement you and your landlord have agreed to.
What if you and your landlord can't agree?
If you and your landlord don’t agree on the additional costs or the bond amount, or if you have a related dispute, you can apply to VCAT.
This information relates to laws in Victoria, Australia.
Find out more about renter rights in Victoria