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Whether it’s the hefty charges or the unexpected consequences, breaking a lease can be a daunting task. But help is at at hand. Here are some dos and don’ts, and ways to keep costs to a minimum. How it works

To break a lease, tenants should advise their property manager of their intention to leave in writing, including the reason for vacating and the date they plan to leave.

Hodges St Kilda director Shane Goldfarb says most property managers today prefer email rather than traditional post because it’s more convenient.

The minimum notice is 28 days if a tenant is on a month-to-month tenancy.

Although it may seem convenient, a friend or relative can’t take over a lease. However, they’re more than welcome to apply.

Lopez says new tenants have to be assessed and a new condition report has to be completed so they can’t be penalised for damages caused by previous residents. What are the costs?

Tenants may have to pay rent until the end of their lease or when a new tenant moves in.

They may also need to pay readvertising costs and re-letting fees calculated on a pro-rata basis.

For example, if the re-letting fee is $400 and there are six months left on a 12-month fixed-term lease, they may need to pay a pro-rata amount of 50 per cent of that fee.

Details on charges are usually included in the lease agreement.

Goldfarb says tenants should continue paying periodically in line with their agreement until a new tenant is found because landlords can’t double charge.

If the tenant pays rent on the first day of every month and the next tenant moves in on the 15th, the landlord has to refund them the pro rata amount of the rent that has been overpaid, he says.

Tenants who believe they have been charged too much and can’t resolve the problem with the agent can apply to Victorian Civil and Administrative Tribunal.

Taking over a lease? What you might not know

Elizabeth Lopez of Biggin and Scott Brighton says the consequences of breaking a lease are sometimes difficult to enforce if the tenant has a fair and reasonable reason.

‘If the tenant takes it to VCAT … if they can no longer afford that rent, they’ve had a loss of job or income, their circumstances have changed, they can argue very strongly to get out of their lease,’ she says.

Lopez says one of their tenants gave them more than 28 days of notice in writing to break the lease, and mentioned ‘financial hardship’ in their letter.

The case ended up at VCAT, she says, and the tenant was able to get out of the lease and only pay rent until the date they said they would be vacating.

‘It’s not always definite that you can get people to continue to pay that rent indefinitely until someone else is found,’ she says.

‘Sometimes they may lease the property in January, when it’s a very buoyant market, and they break their lease in June, when it’s freezing cold and it’s not as buoyant.

‘They may not be able to lease it for another six months, but a tenant has good grounds to have that rental amount reassessed.’

James Leckie, a tenancy lawyer at the Western Community Legal Centre, says tenants can also apply to the tribunal for the fixed term to be reduced for unforeseen circumstances such as being given a work contract to move overseas, or suffering a disability so they can no longer live in the property.

‘It’s a really good idea to contest it as hard as you can,’ he says. ‘We always encourage tenants to go along to hearings because it is really important for them to put their side of the argument forward.’ Keeping costs to a minimum

It’s in the tenant’s best interests to present the property immaculately and be flexible with open times so the property has every chance of getting leased.

‘Agents can be very lazy, because in their minds, the property is already leased, so they don’t have to work that hard to find a tenant,’ Lopez says.

‘As the tenant who is breaking the lease, you want to make sure it’s advertised and there’s regular inspection times, and … [find out] how many people they’ve had through.’

Some tenants have also invested in ways to fast track the process of re-letting the property.

Goldfarb says tenants have paid for professional photography, while others have offered to offset a cheaper rent for 12 months or provided two weeks’ rent free for the next tenant.

‘In a market with an oversupply of rental accommodation and low demand from prospective tenants, they need to look at all avenues to make the property appealing,’ he says. Avoiding the blacklist

Agents have access to databases of tenants who have been ‘blacklisted’.

A tenant may find themselves on the database if they owe the landlord more money than the bond, or if the landlord is granted a possession order because the tenant breached the tenancy agreement or damaged the property, says Yaelle Caspi, policy officer at the Tenants Union of Victoria.

Tenants must be informed if they are listed on a database, and if they are found on one by an agent for a prospective property.

The listing lasts for up to three years, Caspi says, and tenants who believe they are unfairly listed can apply to VCAT to have their name removed.

A tenant can also check whether they are listed under a database by contacting the company directly.

Leckie says there needs be a lot more transparency by property managers in terms of which company they use, the circumstances in which they’re going to use the database and how you can contest it.

Caspi says being listed on a database can have ‘detrimental effects’.

‘It essentially locks them out of the private rental market,’ she says. ‘This can be particularly an issue if people have experienced family violence, who have episodic mental health issues, or who may have experienced a crisis.’ Future prospects

Goldfarb says breaking a lease doesn’t lower a tenant’s prospects to rent the next property as long as they include a genuine reason.

He says working together with the landlord and agent can, in fact, lead to a great rental reference.


Posted by Christina Zhou – Domain on 16th November, 2015