Breaking a lease can be a costly, and stressful, process.
In NSW for example, if there’s no break fee specified in your tenancy agreement, which there often isn’t, then it can just come down to a process of negotiation with your landlord, who can ask for compensation.
Your landlord could ask for funds to cover loss of rent, advertising and a letting fee if they use an agent – and all of these costs can amount to thousands, according to Fair Trading NSW.
But there’s one way tenants could get out of paying any costs, and that’s by finding a new tenant to take over their lease for the remaining period.
Sites like Flatmates.com.au can help you find a tenant to assume your lease, but often it’s through sub-letting, rather than actually taking over your lease.
But for $40, renters wanting to break their lease could find new tenants for their property via a new app called Break Your Lease.
The app claims to match up prospective tenants and properties belonging to tenants who can’t honour their lease anymore. It costs $40 to register the lease you want to break, but that’s the only fee.
“This means that no termination fee is applicable because the tenants have found someone new to take over the lease, and they can leave before their lease is up,” said the app’s founder Richard Saville.
And it’s come at a good time. The pandemic saw around one million Aussies lose their jobs at the peak of unemployment, meaning many weren’t able to pay their leases.
While the Government put eviction moratoriums in place to stop Ausses getting booted from their rentals during Covid-19, when these end, it’s likely many Aussies still won’t be able to foot the bill.
“The economy right now is not stable, which means people cannot afford their leases, and these tenants will be unable to stay in their current lease,” Saville said.
“The only way tenants could leave their lease, until now, was to pay a large termination fee or run around trying to find a friend or acquaintance interested in taking over the lease.”
Saville said the idea came to him while he was working in real estate and clients would ask to break their leases, leaving him to find a replacement.
“[I figured] why not create a better option that will ensure these people are actually brought to us?” he said.
It’s good news for agents too, who don’t need to do the hard yards to find a replacement tenant for their clients.
The app offers commercial lease takeovers too, but those come with a $70 registration fee.
Around 700,000 Aussies have downloaded the app since it launched in May.
Can my landlord say no to a new tenant?
Your landlord could withhold consent, but it has to be reasonable to do so, according to the Tenants’ Union of NSW.
The landlord could withhold consent if the number of proposed occupants is more than allowed by the tenancy agreement, or if the proposed tenant is listed on a tenant database.
The landlord can also withhold consent if they reasonably think the premises will be overcrowded.
If you write to the landlord with evidence that the tenant can pay the rent, and that they are of good character, then it’s likely the landlord will agree to let you transfer the tenancy.
If they do withhold consent, you can apply to the Tribunal in your state for an order that allows you to transfer your lease, and the Tribunal will decide on the matter.
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