BREAK A LEASE AT YOUR PERIL
ERRANT TENANTS FACE BEING HIT FOR RESIDUAL COSTS
FALLING rental rates, low house prices and economic uncertainty are fuelling a surge in Perth tenants breaking their leases.
REIWA president Hayden Groves said their advice line had received a lot of calls about break lease situations.
“At the moment, both the rental and sales markets are facing downward pressure, which is unusual,” he said.
“It could be that tenants are taking the opportunity to buy their own home but they are also taking advantage of the lower rental prices.
“A lot more break leases are occurring, especially in the apartment sector, where new apartments are coming to the market.
“A tenant living in an older apartment might find they can rent a brand new apartment for the same price as their old one and are breaking their lease.”
While saving money on rent or buying a home might be attractive, breaking a lease could be risky and costly for the tenant.
The Residential Tenancy Agreement is a legal contract and the owner is entitled to ensure their financial position is no worse off as a result of a tenant breaking their tenancy agreement.
“Tenants may not realise that they are liable for the rental payment until the lease ends,” Mr Groves said. “And while the owner must attempt to mitigate their losses, if they cannot find a new tenant at the same price, the former tenant can be liable for any difference.
“For example, if the tenant was paying $400 per week and the new tenant is paying $350 per week, the vacating tenant may have to pay the difference until their lease ends.”
Tenants may also be liable for other costs, including upkeep on the premises, as well as any other reasonable costs incurred by the owner until a new tenant is found or the original lease ends.
Tenants may not realise that they are liable for the rental payment until the lease ends. And while the owner must attempt to mitigate their losses, if they cannot find a new tenant at the same price, the former tenant can be liable for any difference.