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Quite often, Landlords will be surprised when we contact them to advise their tenant has decided to break their lease agreement. Sometimes, renters will experience hardship which will cause them to have to break their lease. If they want to break their lease early they can do so, however, will be asked to pay ‘Break Lease’ costs which can often be expensive. 

In recent months, we have seen a spike in Break Lease events occurring, this can be attributed to cost of living pressures, individual circumstances such as job transfers, downsizing etc.

As an Investor who may be unaware of the processes involved in a Break Lease, it can be quite daunting at first, understanding what is going to occur however put simply a Break Lease is treated the same way it would occur at the end of a fixed term lease agreement.

The tenant will provide their notice of intention to leave, the advertising will begin, a new tenant will be found, and life will go on.

The difference, is the tenants are responsible for covering any costs the Landlord would incur during this process, such as;

  • reasonable re-letting costs (usually 1 week’s rent plus GST)
  • reasonable advertising costs (if incurred), and
  • compensation for loss of rent (until a new tenant is found or until the end date of the agreement – whichever happens first).

It’s important to remember as the Property Manager/Owners we must mitigate the tenants costs associated with breaking the lease. For example, simply saying no to every application because the outgoing tenant is obligated to keep paying rent. Eventually the outgoing tenant will believe there is grounds to contest the continual rent payments if they feel we are not mitigating their loss.

Throughout the break lease process, it’s vital to maintain empathy. Understand that unexpected situations can arise, and tenants may find themselves in difficult circumstances. By approaching the process with understanding and empathy, we generally find the best result occurs for all parties involved.

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