Tenants may wish to end a fixed-term tenancy early for a variety of reasons. However, both landlord and tenant must agree to the break of the tenancy agreement before any new arrangements are made. This includes going over potential expenses incurred, new agreements signed, and any other actions necessary for the tenant to exit the property.
To ensure this process goes smoothly, both parties should follow the lease break process. We have broken up this process into ten simple steps.
The first step in the lease breaking process is for the tenant to notify the landlord or property manager that they wish to break their lease, which can be done by either phone call or email. The tenant should then be advised of the process and given an expected time frame.
The tenant should then be supplied with a lease break application and a breakdown of the estimated costs involved in a lease break. During this stage, tenants will also have the opportunity to ask questions about the application, costs, and process.
After both parties have agreed to the break, the tenant will then sign and submit the application.
If a property manager is managing the property, the property manager should communicate an expected timeframe with the owner and receive a written confirmation agreeing to the break.
With everyone agreed, the property can begin to be advertised for viewings.
Once an ideal applicant has been selected, a complete lease break agreement can be sent to the outgoing tenant to sign.
The new tenancy agreement can then be provided to the new tenant for signing. It’s important to note that any new tenancy beginning after 1 July 2021 will be required to be compliant with the Healthy Homes Standards within 90 days of signing agreement.
The ingoing tenant will then pay the rent in advance and bond.
The next step of this process is sending the invoice of ‘Expenses Reasonably Incurred’ (as itemised in Step 2) to the outgoing tenant.
These expenses are costs incurred by the owner as a result of the tenancy being ended prematurely.
The following are examples of costs that can be charged to the outgoing tenant:
- Any advertising fees
- The property manager’s hourly fees
- Viewings (time spent performing viewings/petrol costs for going to and from the property)
- Background and credit score checks
- Tenant screening (reviewing applications and calling references)
- Any costs incurred from the new tenancy agreement
- Inspections (both outgoing and ongoing)
- Any time spent performing communication with the outgoing tenan
- Any other out of pocket expenses paid to a third party
Finally, the property can then be inspected for any damages, followed by the lodging of the bond refund to the outgoing tenant (allow for 2-3 weeks). Once this is completed, the property can undergo an ingoing inspection for the ingoing tenants.
Landlords can be liable if they do not correctly follow this process, so it’s best to have an experienced property manager handle everything from start to finish. Get in touch with Angel Property Managers today to see how we can help you navigate a lease break.