Hi Guys! Welcome back to our Property Management Knowledge Sharing Series. This series aims to better serve our landlord clients and address the questions you may encounter.
Recently, we’ve noticed that many landlords are unclear about the latest regulations surrounding tenants breaking their lease agreements early. To help clarify, we’ve prepared an explanation of the updated Break Lease policy in Queensland, which came into effect on September 30, 2024, as announced by the RTA last year.
Queensland’s New Break Lease Policy Explained
Under this new policy, tenants who need to terminate their lease early are required to pay only one of the following compensation fee with the lowest amount:
- The cost calculated based on the remaining lease term, or
- Rent payments until a new tenant is found.
This means from now on, Tenants will only need to pay whichever of the two options is lower when breaking the lease.
How is the cost calculated based on the remaining lease term?
The RTA provides a conversion table on their website for easy calculation. Here’s an example for better understanding:
- Example 1: For a 12-month lease at $500 per week, if the tenant breaks the lease with 4 months remaining, the remaining term equals 33.33% of the full lease term. According to the RTA table, the tenant would need to pay a reletting fee equivalent to 3 weeks’ rent, which is $1,500. Note: This fee includes both the break lease fee and advertising costs but does not reflect the actual amount received by the landlord.
- Example 2: If it takes 4 weeks to find a new tenant, $1,500 would be lower than the total rent for those 4 weeks. In this case, the tenant would pay $1,500.
- Example 3: If a new tenant is found within 2 weeks, paying rent for those 2 weeks ($1,000) would be cheaper than the calculated $1,500. In this scenario, the tenant would only pay $1,000.
Important Note for Landlords
Under this new policy, tenants are no longer required to pay the traditional break lease fee plus full rent until a replacement tenant is found. Instead, they can choose between the two payment options above. Additionally, the reletting fee is capped at a maximum of 4 weeks’ rent and includes 1 week’s letting fee, GST, and advertising costs.
It’s worth mentioning that this policy only applies to agreements signed on or after September 30, 2024. Agreements signed before this date are not affected by the new regulations.
Sum up
For landlords with agreements starting after September 30, it’s important to take note of these changes when handling early lease terminations. If you have specific concerns, feel free to consult the Midas team. We’re here to provide professional advice and assistance tailored to your situation.
I hope this has been helpful for you. See you next time bye bye.
