What Happens If You Break a Rental Lease in Sydney

Most tenants come across the need to move out of their rented properties before the lease term ends. In most instances, it can happen due to changes in personal circumstances. But you will also want to move out earlier by finding a better opportunity elsewhere. No matter what, breaking a lease early is sometimes unavoidable. But before you decide, you need to know what would happen to break a lease rental. Then you can overcome complications linked with rental lease termination. Continue to read this complete guide and we will share more details with you. 

Understanding the Sydney Rental Laws 

A lease agreement is a legally binding contract between the tenant and the landlord or property manager. Breaking this contract prematurely can result in penalties and financial liabilities. The severity of the consequences often depends on the specific terms outlined in the lease agreement. The reason for terminating the tenancy early can also create an impact on the penalties you may have to face. Here are some of the reasons for breaking a lease.

  • The landlord breaching the terms of the rental agreement 
  • Rented premises becoming unsuitable for living
  • The landlord increasing the rent
  • Domestic violence or any other reason
  • Experiencing difficulties to continue with tenancy 
tenant rights Sydney

Notice Period and Proper Procedures

In most cases, tenants are required to provide written notice to the landlord before vacating the premises. The notice period is typically specified in the lease agreement. It will usually range from 14 days to several months. This period depends on the length of the tenancy contract and the terms of the contract. 

Failing to provide proper notice can be considered a breach of the lease agreement. This can result in financial penalties or legal action. It’s essential to carefully review the lease agreement and understand your tenant’s obligations. Then you can follow the correct procedures for terminating the tenancy. This includes providing the required notice period and completing any necessary paperwork.

Early Termination Fees and Compensation

One of the most common consequences of breaking a lease in NSW is the obligation to pay early termination fees. This is a form of compensation you have to pay to the landlord. These would cover the potential financial losses resulting from the tenant’s early departure. They include lost rent and the costs associated with finding a new tenant. When you break a lease early, you should be ready to pay this amount. Charging from you is one of the landlord’s rights and you can clearly see it in the rental agreement. 

The amount of the early termination fee or compensation can vary. It depends on the specific terms of the lease agreement and the policies of your landlord. In most cases, you will have to pay a fixed amount during a lease agreement breach. However, your landlord may calculate it based on the remaining rental payments due for the remainder of the lease term. Jere’s the fee and compensation that you have to pay based on NSW tenancy laws. 

  • If 25% of rental agreement is not complete – 4 weeks of rent 
  • If 50% of rental agreement is not complete – 3 weeks of rent
  • If 75% of rental agreement is not complete – 2 weeks of rent
  • If 100% of rental agreement is not complete – 1 week of rent

Landlords always try to make reasonable efforts to mitigate the losses they have to face during such a situation. Alongside that, they also attempt to find a new tenant as soon as possible. This will help you to minimize your lease breaking consequences. If your landlord can find a tenant quickly, you will not have to pay a considerable amount as fees. 

breaking a lease in Sydney

Forfeiture of Security Deposit

Apart from early termination fees, tenants who break their lease may also have to forfeit the security deposit. You pay a security deposit at the beginning of the tenancy. It will usually cover all the damage or outstanding rent you owe at the end of the lease term. But if you are breaking the rental agreement, you may not get your full rental bond refund. This is something to consider during a lease agreement breach as well. 

If a tenant breaks the lease early, the landlord can claim part or all of the security deposit. The landlord will do it as compensation for the breach of contract. It will eventually help the landlord to minimize the loss created by rental property vacancy. The landlord may also pursue further legal action if the deposit is insufficient to cover the losses.

Potential Legal Action

In some cases, breaking a lease in Sydney can result in legal action taken by the. This is typically a last resort when the tenant fails to pay the required early termination fees. If the breach of contract is particularly severe, you may have to deal with a lawsuit. You will have to face a Sydney tenancy tribunal in such instances as well. 

Legal action may involve the landlord seeking a court order for the tenant to vacate the premises. Your landlord may also take a court order pursuing a claim for damages and unpaid rent. In extreme cases, the landlord may initiate proceedings to recover the costs of re-letting the property. This is where you may have to continue paying the rent until the landlord finds a new tenant for the property. 

Tenants who find themselves in such situations should seek legal advice. Then they can understand their rights and obligations. It can also help the tenants explore potential defences or mitigating factors that are applicable.

breach of rental contract

Negotiating an Early Termination

As you can see, breaking a lease can have significant consequences. However, tenants in Sydney always have the option to negotiate an early termination with their landlord. This approach can potentially minimize the financial impact and avoid legal action. However, both parties should be willing to reach a mutually agreeable solution.

Here are some of the negotiation strategies that you will encounter with the landlord: 

  • Finding a suitable replacement tenant.
  • Agreeing to forfeit part of all of the security deposit.
  • Proposing a lump sum payment to cover the estimated losses of the landlord. 

The success of these negotiations often depends on the situation of the tenant. If you can demonstrate a genuine reason for terminating the lease early, you can minimize the consequences. You should also be willing to compromise and work collaboratively with the landlord.

Seeking Alternatives to Breaking the Lease

Before resorting to breaking a lease, tenants in Sydney may want to explore alternative options. Such options could alleviate the need for early termination. These alternatives may include:

#1 Subletting

If permitted by the lease agreement, tenants may have the option to sublet the property.  This is where you find another tenant for the remainder of the lease term. It can help mitigate financial losses for both the tenant and the landlord.

#2 Assignment

In some cases, the lease agreement may allow for the assignment of the lease to a new tenant. This is where you effectively transfer the lease to a new tenant. 

#3 Negotiating a Lease Break Clause

If the lease agreement does not already include a break clause, tenants can request to include one. This clause would outline the specific conditions for terminating the lease early. Moreover, it will explain the fees that you have to pay when moving out of the apartment. 

#4 Seeking Landlord Approval

In certain situations, landlords are willing to approve an early termination without penalties. This happens if the reason of the tenant for leaving is legitimate and reasonable. A few examples of such reasons include job relocation or family emergencies.

It’s important to carefully review the lease agreement when unexpected happens. Then you can communicate openly with the landlord or property manager to explore all available options. 

rental lease disputes

Final Words 

Breaking a rental lease in Sydney can have significant legal and financial consequences for tenants. It’s important to understand the terms of the lease agreement and provide proper notice. You should also be ready to pay early termination fees, compensation, or forfeit the security deposit.

In some cases, landlords may pursue legal action to recover additional losses. In such situations, tenants will need to seek legal advice and explore potential defences. No matter what, the best thing you can do is to negotiate with your landlord before ending. Your landlord has experience with ending many leases before the end of the tenancy period. Hence, you can expect the landlord to provide you with the right solution at all times.

By working with the landlord, you can get a breakdown of all the options available. If you proceed to terminate leases without letting the landlord know, you will face negative consequences. After agreeing upon a solution to give up accommodation, you should properly clean it as well. Proper end of lease cleaning will help you leave a positive impression on the mind of your landlord. This is where we at Affordable Cleaning and Gardening Services can help. We can take care of cleaning your apartment while you deal with the landlord and find a solution. Contact us today to discuss more.