* Under the new Act there is now the provision of an additional term in the Tenancy Agreement for tenant’s requesting to break their agreement called a ‘break fee’.
The additional term allows for a fixed penalty if the tenant breaks the agreement early or abandons the property.
These fixed penalties are for fixed term agreements of three years or less.
- An amount equal to 6 weeks rent if the term is less than 50% expired, or
- An amount equal to 4 weeks rent if the term is greater than 50% expired.
The landlord/agent does have the option to delete this term from the agreement and the tenant is then liable to pay reasonable compensation to the landlord for any loss (such as, rent, advertising, etc.)
If you choose to delete the fixed break fee penalty the compensation is basically the same as it was under the previous Act.
As the owner we will require you to decide, which option you wish to be included in the Agreement.
Option 1 – Fixed Penalty
Option 2 – Claim the actual compensation for any loss
Basically, you will be choosing a low or high risk option.
With option 1, if the tenant wishes to break their agreement in the first half of the tenancy, you can claim a fixed six weeks rent – even if the property is let within a week, resulting in a profit from the tenant. However, if it takes a longer period of time to secure a tenant, you may be out of pocket if the loss is greater than the fixed penalty.
With option 2, you can claim the actual loss incurred and not profit.
We will require you to complete the back page of this letter to advise our agency, which option you choose.
TENANT BREAKING AN AGREEMENT EARLY WITHOUT PENALTY
A tenant can break a fixed-term agreement without penalty if:
- the tenant has accepted social housing premises, or
- the tenant has accepted a place in aged care, or
- the tenant is prohibited by an AVO from accessing the property