How Much Does it Cost to Break a Lease?

April 16th, 2023

5 min read

Breaking a lease can be a tricky and costly experience for renters in Australia. Tenants may need to end theirs early. Reasons include a job relocation, a change in personal circumstances, or dissatisfaction with the property. Due to this, renters must know the actual cost of breaking their lease. The financial implications can be significant, and it is essential to know what to expect. This guide will explore the various expenses associated with breaking a lease in Australia, including penalties, rent payments, and potential legal fees.

Here is How Much it Will Cost You to Break a Lease

This guide will provide tips on minimising costs and navigating 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?

Breaking a lease in Australia varies for every state. There's no fixed break-lease fee for most 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 are 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 fixed term ends.

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 contain a clause outlining the costs of breaking the lease. It 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.

Sometimes, 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 communicating with your landlord and negotiating 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 when the tenant cannot meet their basic needs due to circumstances beyond their control.

Excessive hardship includes losing your job, suffering a severe illness or injury, or experiencing family violence. To qualify for this, you must provide evidence of your situation, such as medical certificates, police reports, or letters from social workers or support services.

You must also 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 termination date, and you must vacate the property within a reasonable timeframe.

What If I Can’t Afford to Terminate My Lease?

Breaking a lease can be costly; you may need to explore other options if you can't afford to pay the early termination fee. Here are some tips on how to minimise the costs of breaking a lease:

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 draft a loan agreement to formalise the arrangement, including the repayment terms and interest rate (if any). People you can count on are the most important during times like this.

Set Up a Crowdfunding Account

You can also set up a crowdfunding account to pay the early termination fee. Crowdfunding platforms like GoFundMe or Kickstarter allow you to create a fundraising campaign and share it with friends, family, and social networks.

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 must meet the lender's eligibility criteria and provide documentation to support your application.

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 have high interest rates and fees. Ensure you can make the minimum monthly payments and pay off the balance as soon as possible to avoid accumulating debt.

Wagetap can Help

Instant Cash Advance

Wagetap, one of Australia's leading wage advance apps, allows you access to your pay instantly. Download the app and sign up for an account to request up to $500 and repay on your next payday. This can help you if you are currently short on cash and an emergency needs to be settled immediately.

Bill Split Feature

Wagetap also offers a bill split feature, which allows you to pay up to $600 and repay in instalments. Manage your finances if you need to break a lease and need extra cash to cover any fees.

Breaking a lease can be a stressful and costly experience, but there are ways to minimise the costs and navigate the process effectively.

Download the App Today

If you find yourself in a situation where you need to break a lease, you can download Wagetap to help you manage 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.

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