When is it OK for a Tenant to Terminate a Lease Early?

Unexpected life changes happen for all of us, including our tenants. When a tenant wants to end a lease early it can be costly for them.
 
Depending on the tenancy agreement the tenant may have to pay rent until a new tenant takes over or the fixed term period ends, and a percentage of the advertising costs and the agents reletting fee.
 
As a landlord you must take all reasonable steps to find a replacement tenant as soon as possible.
 
You can, of course, end a tenancy agreement at any time if you and your tenant agree to do so. A tenant may also request to transfer the tenancy to someone else with your consent, and would in that case not be liable to pay any extra costs.
 
Be aware that there are some circumstances where a tenant can terminate a lease early without penalty.  If you put the property on the market, but the tenants were not told about this before they signed the lease, then the tenant is not liable to pay anything extra. Other less common reasons are:
 

  • You as landlord breach the terms of the lease
  • A tenant has accepted an offer of social housing (e.g. from Housing NSW)
  • They need to move into an aged care facility or nursing home
  • Your tenant takes out an AVO against someone else who was living at the property.


A tenant can give 21 days’ written notice to end an agreement early if:

You have a fixed term agreement of more than 2 years and you have given them a rent increase notice or
Their co-tenant passes away.
 
You and your tenant could agree to include a break fee clause in the additional terms of the lease.  This is a fixed rate penalty that the tenant agrees to pay if they move out before the end of the lease.  See The Department of Fair Trading or your Property Manager for more information.