Contributors

Ben Cording

Principal Solicitor, Tenants Victoria

Lulu Banay

Solicitor, Tenants Victoria

Ending a rental agreement: Renter wants to leave

Last updated

1 July 2021

Overview

There are many ways for a renter to end their rental agreement. Depending on whether the agreement is a fixed-term or a periodic agreement, and the circumstances prior to the agreement, the renter may be able to validly terminate the agreement.

If a renter does not terminate the agreement via a means set out in the Residential Tenancies Act 1997 (Vic) (‘RT Act’), they may be liable for lease-breaking costs or the costs of failing to give the proper amount of notice. It is important that a renter understands which is the best way to lawfully terminate their lease so they do not incur unnecessary liabilities.

28-day Notice of Intention to Vacate

If a rental agreement is periodic (see ‘Fixed-term and periodic agreements’ under ‘Agreements’ in ‘Starting a tenancy‘) and the renter wants to leave, the renter must give the rental provider at least 28 days’ notice that they intend to vacate the premises (s 91Z RT Act).

The notice must be in writing and must be signed (s 91ZZN RT Act); it should be signed by all renters where possible. This notice is called a Notice of Intention to Vacate. The renter can give this notice in the form of a letter, or on the Notice of Intention to Vacate Rented Premises by Renter form, which can be downloaded from CAV’s website.

If the rental agreement is for a fixed term, the renter may only give a valid Notice of Intention to Vacate that expires on or after the last day of the fixed term.

The notice should be delivered personally, or posted (registered mail is preferable), or via email (if the rental provider or agent has consented to electronic service) (s 506 RT Act). The renter must ensure that the rental provider receives 28 days clear notice (i.e. if the notice is sent by mail, the renter should allow at least two extra days for delivery).

It is good practice to contact the agent or rental provider shortly after the Notice of Intention to Vacate to confirm receipt of the notice.

Reduced Notice of Intention to Vacate

In some circumstances, renters with fixed-term rental agreements can give a Notice of Intention to Vacate that expires before the end of the fixed term; renters with periodic rental agreements can give less than 28 days’ notice.

A renter can serve the rental provider with a 14-day Notice of Intention to Vacate if (s 91ZB RT Act) if the rental provider has:

  • given the renter a notice of intention to sell and they were not told of the proposed sale before they entered into the rental agreement; or
  • refused the renter’s request to make reasonable modifications so the property is suitable for their disability; or
  • had their registration as a NDIS-registered provider revoked; or
  • has given the renter a Notice to Vacate for one of these reasons:
    • repairs, renovations, reconstruction (s 91ZX), 
    • demolition (s 91ZY), 
    • property to be used as a business (s 91ZZ), 
    • rental provider, or dependent family member, to move in (s 91ZZA);
  • property is sold or for sale (s 91ZZB);
  • property is required for a public purpose (s 91ZZC);
  • it is the end of a fixed-term agreement (s 91ZZD, 91ZZDA);
  • the renter is a public housing renter and is no longer eligible for public housing (s 91ZZE).

A renter can serve the rental provider with a 14-day Notice of Intention to Vacate if (s 91ZB RT Act) if the renter:

  • requires special or personal care that they cannot get at the premises; or
  • has a written offer of public housing or a registered community housing provider; or
  • is going into temporary crisis accommodation (s 91ZB(1)(b,c,d)).

The renter also has to provide documentary evidence as proof if they are giving a Notice of Intention to Vacate for one of the three reasons above (s 91ZB(4) RT Act). For example, the written offer of public housing or attaching a doctor’s letter detailing the special or personal care and why they cannot access it at the rented premises.

If the renter gives the rental provider a Notice of Intention to Vacate for any of the above reasons other than in response to a Notice to Vacate, then the renter is not liable for any form of lease breaking fee (s 91ZB(5) RT Act).

If the Notice of Intention to Vacate was given in response to a Notice to Vacate, VCAT cannot award compensation for loss of future rent to the rental provider (s 211A(3)(d) RT Act). However, it is unclear from the RT Act whether the rental provider can claim some other kind of compensation for the renter ending the rental agreement early.


Premises unfit for human habitation or does not meet minimum standards

A renter can serve a rental provider with an immed-iate Notice of Intention to Vacate if the rental premises are unfit for human habitation or have been destroyed totally, or to such an extent as to be rendered unsafe (s 91ZD RT Act). In general, there needs to be serious problems for a premises to be considered unfit for human habitation.

A renter can notify the rental provider before they take possession of the premises or during the rental agreement (s 91L, 91ZD RT Act). This notice can be served regardless of whether the rental agreement is fixed term or periodic. 

A renter can serve a rental provider with an immediate Notice to Vacate if the premises does not meet any rental minimum standard and the renter has not entered into possession (s 91L RT Act). This notice can be served regardless of whether the rental agreement is fixed term or periodic, but it may only be done if the renter has not taken occupation. Typically, this is held to mean the renter has not started sleeping at the rented premises (even if they have moved in their personal goods).

Renters should be cautious about serving a notice on these grounds. If the rental provider disputes the claim that the premises are unfit for human habitation or the premises do not meet a rental minimum standard, the renter has to establish a proper basis for serving this notice at VCAT. For this reason, it is preferable to include the statement and evidence specifically stating why the premises are unfit for habitation or do not meet a rental minimum standard in the Notice of Intention to Vacate itself. Evidence (e.g. photographs, witness statements, reports from trades people, engineers, the local council or expert builders or surveyors) may be obtained to support the notice.

Rental provider is in breach

If a rental provider is in breach of any of their duties under the RT Act (e.g. disturbing a renter’s quiet enjoyment), the renter may be able to end their rental agreement early.

The renter needs to first serve the rental provider with a Breach of Duty Notice. If the rental provider does not comply with the Breach of Duty Notice within 14 days, then the renter can apply to VCAT for a compliance order.

The renter can then serve the rental provider with a 14-day Notice of Intention to Vacate if:

  • the rental provider fails to comply with a VCAT order (s 91ZE RT Act); or 
  • the renter has sent the rental provider a Breach of Duty Notice twice before for the same duty provision, and they breach that duty for a third time (s 91ZF RT Act).

If the rental provider makes an allegation of lease-breaking, the renter is required to prove each of the breaches, or the failure to comply with the compliance order.


Long-term rental agreement not in standard form

If a renter has a fixed-term agreement that is longer than five years, and the standard form was not used, the renter can serve the rental provider with a 28-day Notice of Intention to Vacate (s 91ZC RT Act).

The renter is not liable for any lease-breaking fee (s 91ZC(4) RT Act).


Breaking a fixed-term rental agreement (lease breaking)

A renter may want to vacate the premises before the end of a fixed-term agreement. Generally (without an agreement to the contrary), if a renter moves out before the end of a fixed-term rental agreement, the renter is liable to compensate the rental provider for breaking the rental agreement.

Before returning the keys to the premises, renters are strongly encouraged to seek legal advice to determine if any other avenues are available to terminate the rental agreement under the RT Act.

Where a renter has ended a rental agreement early, it is common for rental providers and agents to insist that rent continue to be paid as it accrues. However, once a renter has vacated the premises, the rental agreement is terminated and they are no longer liable to pay rent. Nonetheless, the rental provider is entitled to make a claim for compensation for any period of lost rental that has resulted from the renter moving out before the end of the fixed term.

Generally, renters are advised to only pay rent up until the date the keys are returned. From this point, the renter remains liable for reasonable compensa-tion at an amount similar to rent. In most cases, if the rent continues to be paid, there is less incentive for the rental provider to locate new renters.

After returning the keys, renters may attempt to recover their bond. Such bond claims may be adjourned depending on the circumstances. Renters should monitor the rental provider’s efforts to re-let the premises. Once new renters have been found, the rental provider can apply to VCAT for compensation. The rental provider has to justify the reasonableness of the compensation claimed.

What can the rental provider claim?

If the renter breaks a fixed-term rental agreement, the rental provider can claim compensation (s 210 RT Act) for any loss or damage that results from the renter ending the rental agreement early. 

Such costs may include:

  • a re-letting fee (calculated on pro-rata basis);
  • advertising costs (calculated on pro-rata basis);
  • rent for a reasonable time until new renters move in, or until the end of the fixed-term rental agreement, whichever is less.

When determining the amount of compensation payable, VCAT must determine advertising costs and reletting fees (if any) on a basis that is proportionate to the actual cost of securing the current renter (s 211A(3) RT Act).

Renters are not liable for advertising and reletting fees upon breaking a fixed-term rental agreement that is a renewal of the original fixed term (see Craig v Mitchell (Residential Tenancies) [2015] VCAT 597 (27 April 2015)).

Previously, lease-breaking was based solely on case law; there have been no published decisions to date on whether the new legislation has changed any of the practices in relation to lease-breaking.

Reasonable costs

What constitutes reasonable costs is determined by VCAT, which considers factors such as:

  • the amount of notice, if any, given to the rental provider by the renter;
  • whether the renter or the rental provider advertised the premises for a new renter;
  • the length of time left to run on the fixed term;
  • any action taken by the rental provider or their agent to find new renters; and
  • the reasonableness or otherwise of any refusal by the rental provider of prospective new renters.

Costs may not apply for private rental providers. Consideration should also be given with respect to lease breaking of renewed leases, and the losses a rental provider might have ordinarily had to bear should a new fixed-term agreement not be entered into. This is a matter VCAT may wish to consider.

Agreements about lease-breaking costs

A rental provider is not automatically entitled to lease-breaking costs. Generally, renters are advised not to sign any form that requires acknowledgment of liability of the above lease-breaking fees. Any terms in the rental agreement, or subsequently signed agreement regarding lease-breaking, may not necessarily be enforceable (s 27 RT Act), as the actual loss must still be established and evidenced to VCAT. 

If a rental agreement was entered into from 29 March 2021, the following terms are prohibited:

  • a term that provides that if the renter contravenes the rental agreement, the renter is liable to pay all or part of the remaining rent under the rental agreement, or increased rent, or a penalty, or liquidated damages; or
  • a term that imposes fixed fees for terminating a rental agreement early, unless the basis for calculating the fixed fees has been set out in the rental agreement (s 27B RT Act).

These terms are invalid and unenforceable. It is an offence to include these terms in a rental agree-ment from 29 March 2021 (ss 26A, 27 RT Act).

In lieu of signing any acknowledgment regarding lease-breaking liabilities, renters should affirm – on the date they gave the Notice of Intention to Vacate – that they will not pay any further rent until the matter is determined by VCAT. Renters should also affirm that the rental provider has an obligation to mitigate loss pursuant to section 211(e) of the RT Act. Parties may also wish to refer to ‘Tenancy databases’ in ‘Starting a tenancy‘.

Rental provider should minimise loss

The rental provider has a duty to keep their loss to a minimum (s 211(e) RT Act). Further, when VCAT calculates the compensation for loss of rent payable (if any), it must take into account what loss could reasonably have been mitigated by the rental provider promptly reletting the premises (s 211A(3)(b)). If a rental provider does anything to increase the costs of the lease break (e.g. putting up the rent so that it is more difficult to find replacement renters), then the renter should argue that their liabilities should be substantially reduced.

The renter should check that the rental provider or agent promptly advertises the property, and that they do not advertise it at a higher rental than the renter is paying. The renter should also keep a record of how many prospective renters inspect the property. Evidence of the rental provider refusing a reasonable candidate or efforts to transfer the lease may also be relevant.

VCAT may also take into account any hardship the renter would have incurred due to an unforeseen change in the renter’s circumstance (s 211A(3)(c) RT Act). This is particularly relevant for renters who ideally should have applied for a reduction of the fixed term (or other options) but were not aware of their lawful options.

The renter should be as co-operative as possible with the rental provider’s or agent’s attempts to find new renters. For example, undertaking additional advertising and co-operating with inspections by prospective renters will help to minimise the rental provider’s loss for which the renter may be liable.

The renter should also apply to have their bond returned as soon as possible after the termination of their rental agreement. While it is unlikely that the rental provider will agree unless the renter agrees to pay lease-breaking costs, a renter can make claims to VCAT or to the RTBA without the rental provider’s consent (see Recovering bond money’).

Renters may also claim compensation where the rental provider has, by an act or omission, caused a rental agreement to terminate during the fixed term. Such examples include mortgage default, or letting of premises that are not zoned for residential use, and being required to leave (see Compensation claims related to tenancy’).


Breaking a Form 2 long-term rental agreement

Renters who want to get out of a long-term rental agreement should apply for a reduction of the fixed term, rather than breaking the lease.

Clause 16 of Form 2 provides that a rental provider is entitled to ask for one month’s rent for every full year remaining on the rental agreement.

If VCAT is determining a compensation claim for breaking a rental agreement for a fixed term of more than five years, it must only award compensation of one month’s rent for every full year remaining on the rental agreement (s 211A(4) RT Act).


Hardship application for reduction or termination of a fixed-term agreement

A renter with a fixed-term tenancy agreement may apply to VCAT for an order reducing or terminating the agreement because of hardship (s 91U RT Act).

An application of this type may be useful for a person who has lost their job, or who needs to relocate for work or to care for a family member. These applications can be used for any reasons where there is an unforeseen hardship, and it would cause the renter severe hardship if they had to continue in the rental agreement. Applications are made using the general application form on VCAT’s website.

The renter may apply, under section 91U of the RT Act, only while they remain in possession of the premises. Once the renter has given up possession of the premises, the tenancy agreement is terminated and therefore cannot be varied or reduced. Thus, it is critical – if a renter intends on making such an application – that they keep the keys until the hearing is deter-mined. If the reduction is granted, they should return the keys on the day that the tenancy is to end, according to the order.

VCAT may only reduce the term of an agreement – and make any necessary variations or terminate a fixed-term rental agreement – if it is satisfied that:

  • there has been an unforeseen change in the applicant’s circumstances; and
  • the applicant would suffer severe hardship if the term was not reduced; and
  • the applicant’s hardship would be greater than the hardship suffered by the other party if the term was reduced or the agreement terminated (s 91U(2) RT Act).

VCAT may determine what compensation, if any, should be paid by the rental provider due to the reduction of the fixed term (s 91U RT Act). In some cases, VCAT may award compensation equivalent to the renter’s liability for lease-breaking costs. However, in many cases, the amount of compensation is relatively low compared to a standard lease break. When determining the compensation payable, VCAT must consider any severe hardship the renter would have been expected to suffer due to an unforeseen change in circumstances, if the rental agreement had continued (s 211A(3)(c)). The renter should present an argument that they should not pay compensation or they should pay minimal compensation due to the hardship.

Renters affected by personal or family violence where the person committed the violence is not on the rental agreement should consider a section 91U application. A final intervention order or an interim intervention order is not necessary for the application to be successful. However, VCAT will need to be convinced of the surrounding circumstances relating to the hardship. Consideration should be given with respect to examination and evidence that may be necessary to justify the application.

Generally, a section 91U application will not be dismissed unless there is unsatisfactory hardship or the keys have been returned, but the amount of compensation may be scaled to reflect the hardship imposed on each party. If a section 91U application is dismissed, the rental agreement is not terminated, and the renter needs to consider their alternatives (e.g. lease-breaking or assignment).


Family and personal violence applications to VCAT to terminate or create new rental agreements

Termination and creation applications

Orders to terminate or create rental agreements due to personal or family violence are dealt with under sections 91V–91Y of the RT Act (previously, ss 233A–233D). Applications can be made to either terminate an existing rental agreement, or to terminate an existing rental agreement and create a new rental agreement in the applicant’s name (i.e. the person affected by the violence) for reasons of personal or family violence (s 91V(1) RT Act).

Applications to terminate or create rental agree-ments due to personal or family violence can be made by renters or by any other person who lives at the premises as their principle place of residence (s 91V(2) RT Act).

The perpetrator of the violence must be on the rental agreement (s 91V(2) RT Act). If the perpetrator is not a party to the rental agreement and the renter is seeking to vacate the premises, they need to apply for a termination or reduction of the fixed-term rental agreement (s 91U) (see ‘Hardship application for reduction or termination of a fixed-term agreement’, above).

Fixed-term agreements in rooming houses should be considered in relation to sections 91V–91Y of the RT Act. However, there is no clear case law on this to date, given that liability may be capped to two weeks’ rent (s 142X(1)(a)) RT Act).

If a new rental agreement is created, the agree-ment and rent must be on the same terms and conditions as the existing rental agreement (s 91W(4) RT Act). If the existing tenancy is for a fixed term, the created rental agreement cannot be for a period longer than the existing fixed term (but it may be shorter by order of VCAT if requested by the applicant) (s 91W(4)(b)). It is recommended that the applicant asks VCAT to make orders restricting any listings on tenancy databases (s 91W(7)(b)). VCAT may also make orders in relation to access to collecting goods RT Act.

In making an order, VCAT may determine the parties’ liabilities under the existing rental agreement, including matters pertaining to the bond, liabilities for damage, outstanding utility charges, and liability in relation to outstanding rent (s 91X RT Act).

To date, there are no published decisions about how and in what circumstance rent arrears will be apportioned against a renter who has committed family violence.

It is recommended that an applicant seeks orders protecting their portion of the bond and apportioning liability to the perpetrator of violence for any damage or loss caused by the perpetrator.

A rental provider cannot claim compensation for the early termination of a rental agreement if a rental agreement is terminated under section 91W of the RT Act (s 91X(2)).

Intervention orders
Personal violence

A personal safety intervention order is still required where there is personal violence, and it may be preferable that VCAT’s order excludes the perpetrator from the property (s 91V RT Act).

Family violence

Previously, applicants seeking to end a fixed-term rental agreement because of family violence had to have a final intervention order if they wanted to create a new rental agreement in their name (and exclude the perpetrator of family violence from the rental agreement). Since the April 2020 amendments came into force, a final intervention order is not required for applications to create new rental agreements.

Instead, proof is required that the applicant is being subject to family violence that is being committed by a person who is a party to the rental agreement (s 91V(2) RT Act). In relation to considering if family violence has occurred for the purposes of a section 91V application, VCAT must consider the evidence (s 91W(3)).

Nonetheless, it is still recommended that family violence victims/survivors obtain an intervention order with an exclusion clause or at least ensure they have sought advice about family violence intervention orders.

Listing time for family violence applications

Most importantly, these applications must now be listed by VCAT within three business days (s 91V(7) RT Act). This is much faster than the typical two-to three-week wait for an application to be listed for an ordinary termination or reduction of a fixed-term rental agreement.

Keeping the keys

If a renter is seeking to end a rental agreement under the family violence provisions, or create a new rental agreement, they must retain the keys until an order is made. Generally, VCAT cannot make an order if the keys have been returned. 

What the application must establish

If the applicant is seeking to terminate the existing rental agreement, they must establish the following (s 91W(1B) RT Act):

  • they or their children would be likely to suffer severe hardship if the rental agreement was not terminated;
  • their hardship would be greater than the rental provider’s hardship if VCAT made the order;
  • the order sought is reasonable, given the length of the exclusion under any final family violence intervention order and the length of the existing rental agreement; and
  • the order sought is reasonable, given the interests of any other renters (other than the excluded renter) under the existing rental agreement. Also, other renters support the application.

If an applicant is seeking to create a new rental agreement (effectively removing the perpetrator renter), they must establish the following (s 91W(2) RT Act):

  • they could reasonably be expected to comply with a renter’s duties;
  • they or their children would be likely to suffer severe hardship if they were compelled to leave the premises;
  • their hardship would be greater than the rental provider’s hardship if VCAT made the order;
  • the order sought is reasonable, given the length of the exclusion under any final family violence intervention order and the length of the existing rental agreement; and
  • the order sought is reasonable, given the interests of any other renters (other than the excluded renter) under the existing rental agreement. Also, the other renters support the application.

Rental provider’s compensation

A rental provider is not entitled to any compen-sation as a result of the early termination of a rental agreement under section 91W of the RT Act (s 91X(2)).

Support for family violence applicants at VCAT

VCAT has a dedicated family violence support worker and a dedicated Koori engagement team. These are important supports to help family violence matters run as smoothly as possible. Consideration should also be given to the use of remote witness facilities (see also s 91Y RT Act, regarding the cross-examination of the applicant by the perpetrator) and to other security or support arrangements.

For more information about terminating or varying a lease due to family violence, see Tenants Victoria’s Family Violence Protection Tenancy Kit.


Application to VCAT to create a rental agreement

‘Creation applications’ (to create a new tenancy) generally arise in two circumstances:

  • if there is someone living in the premises as their primary place of residence, who is not a renter, and the all the named renters disappear, abscond or are deceased (s 91S RT Act); or
  • if there is family violence (s 91V).

A person who lives in rented premises as their principal place of residence and who is not a renter of those premises may apply to VCAT for an order that the rental provider enter into rental agreement with them (s 91S RT Act).

The person must satisfy VCAT that:

  • they could reasonably be expected to comply with renter’s duties under the RT Act; and
  • they would suffer severe hardship if compelled to leave the premises; and
  • their hardship would be greater than the rental provider’s (if the order were made).

See also LPB v Director of Housing (Residential Tenancies) [2018] VCAT 684 (4 May 2018).

If a renter lives in social housing and is seeking to create a new rental agreement in their name, they should seek advice as soon as possible. An application for creation should be made to ensure proper process is followed and negotiations can be efficient and constructive. It is common in social housing matters that the director will also apply for an order that the premises is occupied without consent (s 344 RT Act). 

The two matters are usually heard concurrently. If the creation order is made, the rental provider will be directed to enter into a new agreement; if it is not successful, an order requiring the application to vacate will be made.

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