What does it cost to break a lease early in Victoria?
Yes, breaking a lease early in Victoria will cost you money. You are generally responsible for paying rent until a new tenant moves in or the lease ends, plus reasonable re-letting costs such as advertising fees and a pro-rata portion of the letting agent's fee.
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How it works in practice
The Cost of Breaking a Lease
When you sign a fixed-term rental agreement in Victoria, you are legally bound to pay rent for the entire term. If you need to break your lease early, your landlord can seek compensation for the financial loss they experience as a result of your early departure.
Reasonable Re-letting Fees
The most common costs you will face are advertising fees and a re-letting fee. The re-letting fee is usually charged by the real estate agent to find a new tenant. By law in Victoria, this fee must be calculated on a pro-rata basis. This means you only pay for the unexpired portion of your lease. For example, if you break a 12-month lease at the 6-month mark, you should only pay 50% of the letting fee.
Ongoing Rent Responsibility
In addition to re-letting fees, you must continue paying rent until a new renter signs an agreement and moves in, or until your original lease end date arrives, whichever happens first.
Duty to Mitigate Loss
Under Victorian law, the landlord must take all reasonable steps to find a replacement tenant as quickly as possible to minimize your costs. This is known as their "duty to mitigate loss." They cannot simply leave the property empty and demand you pay out the remainder of the lease.
Important exceptions
There are specific legal exceptions where you can break a lease in Victoria without facing standard penalty fees. If you are experiencing severe financial hardship, you can apply directly to the Victorian Civil and Administrative Tribunal (VCAT) to terminate the agreement early.
Additionally, if you are experiencing family violence and need to leave the property for your safety, Victorian rental laws allow you to end your tenancy without facing standard break lease costs. You can also avoid these fees if you and the landlord reach a mutual written agreement to end the lease early without penalty, or if you can find a suitable replacement tenant to take over your existing agreement.
What you should do now
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Review your formal lease agreement to understand your specific fixed-term end date and any outlined break-lease clauses.
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Notify your landlord or property manager in writing as soon as possible about your intention to break the lease early.
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Request a written breakdown of the expected re-letting costs, including the pro-rata letting fee and advertising expenses.
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Assist in the process by making the property highly presentable and easily available for prospective tenant inspections.
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Keep a close eye on rental listings to ensure the agent is actively advertising the property to mitigate your ongoing rental costs.
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