What happens when my tenant breaks their lease?

07/11/2018   Tammy McLaren, Trust Accountant

Congratulations! You’ve successfully secured a tenant for a 12 month lease. You’ve got nothing to worry about, and peace of mind for 12 months, right? Well, there’s the good news and the bad news.

Let’s start with the bad news….

While a fixed term lease means an owner is required to make the property available to the tenant until the end of the lease period (unless of course the tenant defaults), your tenant is also entitled to break their lease and vacate the property, should they wish.  So what happens if they decide to break their agreement and leave early?

Here comes the good news…

While your tenant is entitled to break their lease they have also signed a legally binding agreement to lease the property for a set period, so they can’t just walk away without consequence.  

Upon signing a lease, your tenant becomes responsible for paying the agreed amount of rent, for the entire period of the set agreement. If they decide to leave early, they are responsible for the rent on the property until a new tenant takes possession or until the lease expires – whichever occurs first. 

Your responsibility as a landlord

Although your tenant is responsible for maintaining their lease terms, as a landlord you must also make every attempt to re-let the property within a timely manner. This responsibility is to minimise any undue hardship on the tenant, who quite likely will be paying two lots of rent once they have vacated. 

It’s also important to note that rent increases can be very difficult to implement (unless there has been a clear market shift) as this may be viewed as detrimental to the speedy re-leasing of the property.

Who is responsible for advertising and letting fees?

While you may not be losing out on rent, you may be thinking that it’s not free to advertise and re-lease a property; why should it cost you money when you haven’t done anything wrong?

Fortunately, professional leases like those used by The Hopkins Group often include clauses relating to costs incurred by an owner, should a tenant break their lease – as far as is allowable under the Residential Tenancies Act. In this instance, our lease stipulates that a tenant is to reimburse the owner the full cost of advertising incurred, and to reimburse the owner part of the re-letting fee on a pro-rata basis, based on the unfulfilled portion of their lease agreement.

You’re in safe hands

While a fixed term lease doesn’t necessarily offer the peace of mind you once imagined – thankfully having your property managed by a professional agency like The Hopkins Group can.

As a client of The Hopkins Group, you will be contacted by your property manager as soon as a tenant indicates they will be breaking their lease to confirm you would like the property re-let.  The advertising of the property will then commence immediately to try and secure a new tenant as soon as possible.

Want to learn more? Contact The Hopkins Group on 1300 726 082 to speak with a property manager today – or send us a message via our contact form and we’ll be in touch as soon as we can.


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