Important Update: Changes to Break-Lease Fees Effective from 30 September 2024
As you are likely aware, a number of legislative changes have come into effect this year in relation to the rental of residential properties. What's more, further changes will come into effect on 1 May 2025. We're committed to helping to keep our landlords compliant with these changes, and to keep both landlords and tenants informed about their rights as these various changes come into effect.
In particular, today we would like to keep you informed about important changes to the legislation surrounding break-lease fees (also known as "reletting costs") that come into effect today, 30 September 2024. These updates impact how costs are calculated when a tenant breaks a fixed-term lease early. Below, we’ve outlined the key changes and what they mean for you. This information has been drawn from the Residential Tenancies Authority (RTA), who have also made a helpful fact sheets available about the changes. You're welcome to view the RTA Fact Sheet here.
How are reletting costs now calculated?
When a tenant breaks a fixed-term lease (on agreements terms of up to 3 years), the reletting cost is now calculated based on how much of the lease term has passed. The costs are as follows:
- Less than 25% of the lease expired: 4 weeks’ rent
- 25% to less than 50% expired: 3 weeks’ rent
- 50% to less than 75% expired: 2 weeks’ rent
- 75% or more expired: 1 week’s rent
Importantly, the cost is the lesser of the above amounts or the rent due until a new tenant is found and starts an agreement. As such, if there is still 60% of the term remaining, but a new tenant's general tenancy agreement begins a week after the vacate date, then the costs will be limited to one week.
For example, for a 12-month lease with a weekly rent of $500:
- If a tenant leaves during the first three months (less than 25% of the term), the reletting cost is 4 weeks’ rent, totaling $2,000.
- If they leave during the second three months (25-50% of the term), the reletting cost is 3 weeks’ rent, totaling $1,500.
- If they leave during the third quarter of the agreement (50-75% of the term), the reletting cost is 2 weeks’ rent, or $1,000.
- If they leave during the final three months (more than 75% of the term), the reletting cost is 1 week’s rent, or $500.
Online calculator available
The Residential Tenancies Authority (RTA) has introduced an online reletting costs calculator, designed to assist in calculating reletting costs independently. However, please note that this tool is for guidance only and should not be relied upon as legal advice.
Additional Conditions to Keep in Mind
Can landlords request any other fees when a tenant breaks the lease?
It’s important to note that no additional costs, aside from the specified reletting costs, can be requested from tenants when they break a lease early. This means that special reletting fees and even advertising fees cannot be passed on to the tenant. However, this does not exempt tenants from other financial obligations, such as unpaid rent, service charges, or damages to the property, for which they are still responsible. Bond conditions remain the same.
What happens to existing agreements?
For tenancy agreements signed before 30 September 2024, where a clause for paying reletting costs already exists, these agreements will still be considered compliant with the new legislation. The terms will remain valid through to the end of the agreement, ensuring continuity under the previous rules. As this article is being written on 30 September 2024, any agreements signed after this date will be bound by the new reletting fee structure and cannot include advertising charges or additional fees related to this process.
Disputes and further assistance
In the event of a dispute regarding reletting costs, the matter can be addressed through the bond claim process. If not resolved, it may proceed to the Queensland Civil and Administrative Tribunal (QCAT) for a formal decision.
If you have any questions or need further clarification on these changes, please don't hesitate to reach out to us at Wings Real Estate.
Disclaimer: This article has been prepared with care, but errors and omissions may be present. If in doubt, refer to the RTA's official website for clarification about these changes.