Life can sometimes be unpredictable. As a landlord it is important to be prepared for tenants who may have to break their lease.
While a tenant does have obligations to fulfil when breaking a lease, experience has shown that good will, open and frequent communication and a spirit of cooperation will greatly lead to a far improved outcome for all of the involved parties.
In a perfect world, there should be no out of pocket expenses for you, the landlord, as the tenant would be responsible for paying the let fee (one week’s rent plus GST), advertising costs as well as covering the rent up until a new tenant takes possession of the property. However, to ensure the smoothest transition between tenancies, it is important to remain proactive and flexible.
It is worth considering the following important things:
Negotiate before QCAT takes control of the dispute
If tenants have already been in the property for 10 months out of a 12 month lease, they will not always be responsible for 100% of the break lease costs such as the letting fee and advertising costs.
For residential tenancy disputes, the Queensland Civil and Administrative Tribunal (QCAT) regularly allocates the equivalent of the remainder of the lease as the portion payable by tenants.
Be proactive in this situation and encourage your Property Manager to negotiate with vacating tenants prior to a dispute being escalated to QCAT, where the result will be out of the control of your Property Manager and you as the landlord.
Reduce your asking price
If a tenant has been in the property for two years (when rental prices were much higher) it may be difficult to source a tenant at the same price. Reducing the asking price of a vacated property to an amount more representative of the current market rental prices in the market will increase your chance of securing a new tenant sooner. Your Property Manager should be able to advise you an appropriate rate for rent in the local market. If they are unable to, perhaps it is time to change agencies.
Improve your property
If your property is looking a little run down, or could do with some improvements, it will be harder to secure quality tenants at the price you are seeking. While your property is vacant, it is the best time to make some improvements that may assist it to compete in a market where there is an abundance of high quality properties.
An excellent tenant is worth the effort
While a tenant’s financial obligations to the broken lease are a good safety net, it is important that your Property Manager does not become passive in your search for a new tenant. A great tenant is always worth the effort of finding them.