Breaking a lease can be a tricky and costly experience for renters in Australia. Even though there are occasions where tenants may need to end their lease early, such as job relocation, change in personal circumstances, or simply dissatisfaction with the property, many renters are unaware of the true cost of breaking a lease. The financial implications can be significant, and it is essential to know what to expect. In this guide, we will explore the various expenses associated with breaking a lease in Australia, including penalties, rent payments, and potential legal fees. This guide will also provide tips on how to minimise these costs and navigate the process effectively, so you can make informed decisions and protect your financial interests. Whether you are a renter considering breaking your lease or a landlord dealing with a tenant who wants to leave early, this guide provides the information you need to make the best possible decisions.
Is There a Fixed Rate for Breaking a Lease?
There's no fixed break-lease fee for most Australian states except for NSW where a new rule was introduced in 2020 that makes break lease fees mandatory. According to NSW Fair Trading, mandatory break fees may apply which is payable based on the stage of the agreement.A break fee is a penalty a tenant agrees to pay if they move out before the end of the fixed term.If the mandatory break fee applies, the set fee payable is:
• four weeks rent if less than 25% of the agreement has expired
• three weeks rent if 25% or more but less than 50% of the agreement has expired
• two weeks rent if 50 per cent or more but less than 75% of the agreement has expired
• one week's rent if 75% or more of the agreement has expired.
If you want to break your lease, the first thing you need to do is to check your lease agreement. Most lease agreements contain a clause that outlines the costs associated with breaking the lease. The lease agreement may include a fixed rate or a formula that calculates the cost based on the number of months left on the lease and the monthly rent.In some cases, the landlord may agree to waive the early termination fee or negotiate a lower rate. If you are breaking your lease due to financial hardship, you may be eligible for a lower fee or be allowed to pay the fee in instalments. The key is to communicate with your landlord and negotiate an agreement that works for both parties.
What If I Qualify for Excessive Hardship?
If you are experiencing excessive hardship, you may be able to terminate your lease without paying a penalty. Excessive hardship is defined as a situation where the tenant is unable to meet their basic needs due to circumstances beyond their control. Examples of excessive hardship include losing your job, suffering a serious illness or injury, or experiencing family violence.To qualify for excessive hardship, you will need to provide evidence of your situation, such as medical certificates, police reports, or letters from social workers or support services. You will also need to provide evidence of your financial situation, including bank statements, payslips, and Centrelink statements.If you qualify for excessive hardship, you can apply to the relevant tribunal or court to terminate your lease without penalty. However, you will still be liable for any rent owing up to the date of termination, and you will need to vacate the property within a reasonable timeframe.
What If I Can’t Afford to Terminate My Lease?
Breaking a lease can be a costly undertaking, and if you can't afford to pay the early termination fee, you may need to explore other options. Here are some tips on how to minimise the costs of breaking a lease:
1. Ask Friends and Family for Help
If you are struggling to pay the early termination fee, you may be able to ask friends or family members for a loan or gift. You can draw up a loan agreement to formalise the arrangement, including the repayment terms and interest rate (if any).
2. Get an Instant Cash Advance
Wagetap, one of the leading wage advancewagetap.com/wage-advance/ apps in Australia allows you access to your pay instantly. Download the app and sign up for an account so you can request for up to $500 and repay on your next payday.
3. Set Up a Crowdfunding Account
You can also set up a crowdfunding account to raise money to pay the early termination fee. Crowdfunding platforms like GoFundMe or Kickstarter allow you to create a fundraising campaign and share it with your friends, family, and social networks. Wagetap also offers a bill split feature which allows you to pay your bill up to $600 and you can repay in instalments. This can help you manage your finances in the event where you need to break a lease and are in need of extra cash to cover any fees.
4. Apply for a Loan
If you have a good credit score, you may be able to apply for a personal loan from your bank or credit union. Personal loans typically have lower interest rates than payday loans or cash advances, but you will need to meet the lender's eligibility criteria and provide documentation to support your application.
5. Get a Unsecured Credit Card
You can also consider getting an unsecured credit card to pay the early termination fee. Unsecured credit cards do not require collateral, but they come with high interest rates and fees. Make sure you can afford to make the minimum monthly payments, and pay off the balance as soon as possible to avoid accumulating debt.Breaking a lease can be a stressful and costly experience, but there are ways to minimise the costs and navigate the process effectively. If you are considering breaking your lease, make sure you check your lease agreement, communicate with your landlord, and explore all your options. If you are experiencing excessive hardship, you may be eligible to terminate your lease without penalty. If you can't afford to pay the early termination fee, consider asking friends or family for help, getting an instant cash advance, setting up a crowdfunding account, applying for a loan, or getting an unsecured credit card. With the right information and support, you can make informed decisions and protect your financial interests.
Download Our app Today
If you find yourself in a situation where you need to break a lease, you can download Wagetap to help you in managing your finances better. Having access to extra cash can be a huge help during this time. Download the app and sign up for an account to access your wage now. App Store
For additional help in improving your spending habits, you can always download Wagetap. It is a leading wage advance and bill split app that allows you to access your pay early. Emergencies can always happen and Wagetap can help you handle life's unexpected expenses.