Breaking a fixed-term agreement early

NSW Fair Trading

When a tenant signs a fixed term agreement, they are committing to stay for the full term.
If a tenant wants to move out before the end of the fixed term, there could be costs involved.
There are some situations where a tenant can end a fixed-term agreement without penalty.
A tenant should give the landlord as much notice as they can if they need to end the agreement early.
A tenant should also make it as easy as possible for the landlord or agent to show the property to potential new tenants.

Breaking a fixed-term agreement signed from 23 March 2020

For agreements of three years or less

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 per cent of the agreement has expired
• three weeks rent if 25 per cent or more but less than 50 per cent of the agreement has expired
• two weeks rent if 50 per cent or more but less than 75 per cent of the agreement has expired
• one weeks rent if 75 per cent or more of the agreement has expired.

For agreements more than three years

A landlord may still seek compensation by applying to the NSW Civil and Administrative Tribunal (the Tribunal).
These costs may include loss of rent, advertising and a letting fee if the landlord uses an agent.
The landlord or agent may negotiate an agreed amount of compensation with the tenant.
If the tenant and landlord are unable to agree on the amount of compensation, the landlord may claim from the bond or apply to the Tribunal for an order that the tenant pays the landlord a certain amount of compensation.
The landlord will need to show the Tribunal what (reasonable) steps they took to minimise their losses (e.g. advertising for a new tenant without delay).

For further information regarding breaking your lease contact Moshav Realty on (02) 9188 5000 or follow the link to NSW Fair Trading Ending a Residential Tenancy