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If a tenant wants to end a fixed term lease early, they are responsible for some costs to re-let the property.
The landlord may agree not to claim these costs from the tenant. Tenants must make sure they get any agreement not to claim costs in writing.
The tenant is breaking the lease if they move out of the property before the end of a fixed term agreement. This means the landlord can claim costs for:
- loss of rent - there are maximum timeframes depending on the length of the lease
- advertising
- re-letting.
Some of these costs may be claimed even if the tenant leaves after a breach notice for rent arrears is served. More information on eviction and breaking the lease agreement.
Re-letting the property
When a tenant is under a residential tenancy agreement and leaves a property before the lease ends, the landlord can claim re-letting fees. They can’t claim the fee if they don’t try to re-let the property as soon as possible after the tenant moves out – this is called mitigating the loss.
The tenant can assess if the loss is being mitigated by asking key questions.
- Is the property:
- being advertised appropriately?
- being shown to prospective tenants?
- Has demand in this area dropped and should the rent be reduced? When trying to re-let, the landlord should review the rent amount regularly.
- If the property has been advertised at a higher rent, has this delayed the property being leased?
The landlord doesn’t have to advertise before the tenant moves out of the property. If the date the tenant will leave is unclear, the landlord should be cautious about advertising as there is still a binding lease agreement.
Calculate break lease charges
South Australian Civil and Administrative Tribunal (SACAT) create the below formulas to apply to all advertising and re-letting costs.
Tenants should seek advice because application of the formula could be different if the tenant:
- breaks their lease in the first quarter of the lease term
- pays rent to the end of their fixed term lease, as lease obligations may have been met.
Break lease fee
Less than 24 months remaining – fee due is a maximum 1 month's rent.
More than 24 months remaining – fee due is 1 month's rent for each year of the remaining term (no more than 6 months payable).
This is calculated from the day the tenant moves out.
Advertising fee
Calculations should only include advertisement costs from the date a tenant moves out. Lease length combines any back to back lease terms together.
Advertising using media other than Adelaide newspapers, such as the Internet, is allowed but it needs to be proven as the best option for the property. Claims should use standard charges, as tenants are not expected to pay for corporate headers and branding.
Multiply the total advertising costs by the number of weeks from abandonment to the end of the agreed term. Then divide that amount by 3/4 of the whole agreed tenancy term (including back to back lease lengths).
Each year is counted as 52 weeks.
Example
Total advertising cost = $87.
Number of weeks left on the agreement = 12.
Agreed lease term was 2 years = 104 weeks. 3/4 of that = 78 weeks.
Calculation
Multiply $87 by the 12 weeks left on the agreement $87 x 12 = $1044.
Divide by 78 weeks (which is 3/4 of the full 104 week tenancy agreement).
$1044 ÷ 78 = $13.38 to be paid toward the advertising costs.
Re-letting fee
Calculations include a total tenancy term that combines all back to back lease lengths agreed to.
Apply the SACAT formula to the re-letting fee charged by an agent. The agent can add GST to the re-letting fee before the formula is applied.
The total term of the tenancy agreement, including back to back leases, is used to work out the claim for the re-letting fee.
Example
Rent = $500 + 10% GST (if any applies) = $550 per week.
Term of tenancy is 1 year (52 weeks). 3/4 = 39 weeks.
Time to end of tenancy term when the property is re-let = 12 weeks.
Calculation
Re-letting fee (maximum of 2 weeks rent plus GST) $1100 x 12 weeks = $13,200.
Divide that amount by 3/4 of the whole tenancy term $13,200 ÷ 39 = $338.46.
Any dispute about these calculations can be determined by SACAT.
Hardship
If continuing the tenancy will cause undue hardship, a tenant or landlord can apply to SACAT to end it.
