That’s a very good item to raise Patrick. I don’t think we’ve had it challenged that way through our office so far, but I’d also be interested to hear.

6 weeks? Wow, you guys in NSW are tough. Typically in Qld we charge rent until a new tenant is found plus a break lease fee equal to 1 weeks rent +GST. i suppose this could work out to more than 6 weeks in some cases, but that is not very often. Plus, in extraordinary circumstances, a tenant can go to the tribunal to get the lease set aside.

hi Patrick I recently wrote to Fair Trading about break leases and the new laws etc – you may be interested in their response – please click on the link below and refer to the article at the bottom called NSW – Fair Trading response to break lease charges for tenancy http://www.realestateexcellence.com.au/education-and-training-events-real-estate-excellence/cat_view/48-nsw-compliance-and-best-practice/61-nsw-miscellaneous-matters 

Kind regards

Stacey Holt www.realestateexcellence.com.au

hi Patrick I recently wrote to Fair Trading about break leases and the new laws etc – you may be interested in their response – please click on the link below and refer to the article at the bottom called NSW – Fair Trading response to break lease charges for tenancy http://www.realestateexcellence.com.au/education-and-training-events-real-estate-excellence/cat_view/48-nsw-compliance-and-best-practice/61-nsw-miscellaneous-matters 

Kind regards

Stacey Holt www.realestateexcellence.com.au

Patrick, despite the break fee clause, a Landlord must still take all reasonable steps to mitigate his loss at law, so he/she should ensure that the apartment is relet as soon as possible. Here, given that the tenant has put forward a replacement tenant, then if that replacement tenant is suitable, then there would be no need to advertise and the damages may not amount to 6 weeks. So, it does not appear that you can automatically call up on the 6 week clause without making an effort to reduce that loss. It is a quantification of damages. The 6 week amount is the maximum that your Landlord can claim in that particular case.

Great topic, our office is also waiting for a case to be presented to the CTTT to confirm the outcome.  We have had a few break fee charges on the new Tenancy agreement and charged tenants the 4 & 6 weeks break fee, our understanding of this fee is a tenant pays their rent until the keys are handed back, a seperate charge for the break fee charged.  Regardless of the time another tenant is located and moved into the house, in one case it was only a matter of days.  The tenants were clearly advised of these charges if they broke their lease, they chose to pay this fee as they had purchased a home.  So far we have not had any dramas and if the tenant signed their lease prior to the 31st January have worked on the old break fee charges (rent to another tenant is found and moves in, + letting fee and lease preparation fee),  So far so good, BUT we have been lucky as all tenants have agreed to these fees and chages it will only take one to challenge it!

For those of you who choose to include a “Break Fee” clause, here is a rhetorical question for you……why are you seeking to limit the amount of damages that your client can claim if the amount of damages ends up being more than the above clause quantifies?

Hi Mary, I believe one of the huge benefits that having the break lease clause is that the legislation takes the burden of “duty to mitigate” away. This has been an avenue for tenants to avoid payments for what is a breach of the tenancy agreement. Under the new legislation, it is not a breach of the tenancy agreement, but an agreed method for ending the tenancy early. Whilst the old laws allowed for “rent until another tenant takes possession and the reasonable cost of giving the right to occupy to anther person, subject to the length of the tenancy still remaining”, Tribunal members had the right to make their own decisions on “compensation” based on whether they felt that the landlord took all reasonable steps to mitigate the loss.

I agree with Andrew, with the break fee, the owner does not have to mitigate the tenant’s loss.

Mary, my interpretation of the new Break Lease Fee is different to yours. Regardless of whether the outgoing tenant sources the ingoing tenant or not, they are still required to pay a break fee. Yes, most owners would be reasonable in this situation and not charge the full 4 or 6 weeks. However, the owner will still be charged a letting fee. The Property Manager still needs to complete the outgoing and ingoing inspections.

A question for you…if a tenant has been in a property for a number of years and the current rent is below market by anything up to $50.00 a week, are you not then limiting the owner’s profit by only being able to re-let at the current rent instead of market?

I agree there are pros and cons for both situations. It is up to the owner to make their decision with the guidance of their Property Manager.