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Lease Break of a fixed term tenancy

One of the most common dilemmas for a property manager is how to deal with a tenant who wants a lease break of a fixed term tenancy.

The history of “lease breaks” is that they have been lawful since the inception of the Residential Tenancies Act, but now the rules around this have changed.

Before the RTA Amendment Act 2020 became law, property managers could charge ‘reasonable costs’ however now those costs have to be fully justified.

Legal Authority

In short, S44A outlines if a landlord consents to lease break, authorised by S50 (1) (d)

  • They can recover any expenses reasonably incurred from the outgoing tenant.
  • A landlord who seeks to recover costs from the tenant.
  • Must first provide an itemised breakdown of the expenses incurred.

A landlord who fails to provide an itemised breakdown of the expenses could be liable for exemplary damages of $750 or an infringement fee ranging from $500-$2000.

The Expenses Reasonably Incurred Template, Lease Break Application and Lease Break Agreement can be found here in Total Tenancy.

So, what types of costs can you itemise and charge to the outgoing tenant? And what is the best practice procedure when executing a Lease Break? Watch the Full Training Snippet in Total Tenancy here. 

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