Ending a tenancy: tenant wants to leave


28-day Notice of Intention to Vacate

If the tenancy agreement is periodic (see “Periodic agreements” and “Fixed-term agreements”) and the tenant wants to leave, the tenant must give the landlord at least 28 days’ notice that they intend to vacate the premises (s 235). The notice must be in writing (s 318(1)) and must be signed (s 318(3)). This notice is called a Notice of Intention to Vacate. The tenant can give this notice in the form of a letter, or on the Notice to Landlord form, which can be downloaded from the CAV website.

If the lease is for a fixed term the tenant may only give a valid Notice of Intention to Vacate that expires after the last day of the fixed term.

The notice should be delivered personally or sent by mail (registered mail is preferable) (s 506). The tenant must ensure that the landlord receives 28 days clear notice (i.e. if the notice is sent by mail, the tenant should allow at least two extra days for delivery).

Alternatively, it is possible for a Notice of Intention to Vacate be served via email providing it is compliant with the Act, and that the landlord or agent has given consent to be served via email within the meaning of the Electronic Transactions (Victoria) Act 2000 (Vic).

Premises unfit for human habitation

A tenant can serve a landlord with an immediate Notice of Intention to Vacate if the premises are unfit for human habitation or have been destroyed totally, or to such an extent as to be rendered unsafe. This can be done prior to the tenant entering into possession or during the tenancy (ss 226, 238). This notice can be served regardless of whether the tenancy agreement is fixed term or periodic.

Tenants should be cautious about serving a notice on these grounds. If the landlord disputes the claim that the premises are unfit for human habitation, the tenant will have 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 in the Notice of Intention to Vacate itself. Evidence such as photographs, witness statements, reports from trades people, engineers or a report from the local council or expert builders or surveyors obtained to may be obtained to support the notice.

There would generally need to be serious problems for a premises to be considered unfit for human habitation.

Breaking a fixed-term lease (lease breaking)

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

Prior to handing back the keys to the premises, tenants are strongly encouraged to seek legal advice, to determine if any other avenues available to terminate the tenancy under the RT Act.

Once the tenant has vacated the premises, the tenancy agreement has terminated and they are no longer liable to pay rent. However, the landlord is entitled to make a claim for compensation for any period of lost rental that has resulted from the tenant moving out before the end of the fixed term.

Generally, tenants are advised to only pay rent up until the date the keys are returned. From this point, the tenant will remain liable for reasonable compensation at an amount similar to rent. Generally, if the rent continues to be paid, there is less incentive for the landlord to locate new tenants.

After returning the keys, tenants may attempt to recover their bond. Such bond claims may be adjourned depending on the circumstances. Tenants should monitor the landlord’s efforts to re-let the premises. Once new tenants have been found, the landlord can apply to VCAT for compensation.

The landlord has to justify the reasonableness of the amount compensation claimed.

What can the landlord claim?

If the tenant breaks a fixed-term tenancy agreement, the landlord can make a claim for compensation under section 210 of the RT Act for any loss or damage that results from the tenant ending their lease 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 tenants move in, or until the end of the fixed-term lease – whichever is less.

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

Reasonable costs

What constitutes reasonable costs will be determined by VCAT, which will consider factors such as:

the amount of notice, if any, given to the landlord by the tenant;

whether the tenant or the landlord advertised the premises for a new tenant;

the length of time left to run on the fixed term;

any action taken by the landlord or their agent to find new tenants; and

the reasonableness or otherwise of any refusal by the landlord of prospective new tenants.

Costs such as re-letting fees may not apply for private landlords. Consideration should also be given with respect to lease breaking of renewed leases, and the losses a landlord 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.

Landlord should minimise loss

The landlord is not automatically entitled to lease breaking costs. Generally, tenants are advised not to sign any form that requires acknowledgement of liability of the above lease breaking fees. Any terms in the tenancy agreement itself, or subsequently signed regarding lease breaking may not necessarily be enforceable (s 27), as the actual loss must still be established and evidence to VCAT.

In lieu of signing any acknowledgement regarding lease breaking liabilities, tenants should affirm, on the date they gave notice of intention to vacate, that they will not pay any further rent until determined by VCAT, and that the landlord has an obligation to mitigate loss pursuant to section 211(e) of the RT Act. Parties may also wish to refer to the Tenancy Database information.

The landlord has a duty to keep their loss to a minimum (s 211(e)). If the landlord 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 tenants), then the tenant should argue that their liabilities should be substantially reduced. Tenant should attempt to minimise losses.

The tenant should check that the landlord or agent is prompt in advertising the property, and that they do not advertise it at a higher rental than the tenant is paying. They should also keep a record of how many prospective tenants inspect the property.

The tenant should also be as co-operative as possible with the landlord or agent’s attempts to find new tenants. For example, undertaking additional advertising and co-operating with inspections by prospective tenants will help to minimise the landlord’s loss for which the tenant may be liable. The tenant should also apply to have their bond returned 10 business days after the termination of their tenancy. This is to avoid the landlord claiming lease-breaking costs from the bond (see “Recovering bond money”).

Tenants may also claim compensation where the landlord has, by the act or omission, caused a tenancy 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 (seeCompensation claims”).

Breaking a Form 2 long-term lease

Tenants who want to get out of a long-term lease should apply for a reduction of the fixed term (see below), rather than breaking the lease.

Clause 18 of Form 2 provides that a landlord is entitled to ask for one month’s rent for every full year remaining on the lease. This is capped at a maximum of six years (i.e. six month’s rent).

Application for reduction of a fixed-term agreement

A landlord or a tenant under a fixed-term tenancy agreement may apply to VCAT for an order reducing the term of the agreement, and making any other variations to the agreement that are necessary as a result of that reduction (s 234). Applications are made using the general application form on VCAT’s website (www.vcat.vic.gov.au).

The tenant may apply under section 234 only while they remain in possession of the premises. Once the tenant 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 tenant intends on making such an application – that they hold onto the keys until the hearing is determined. If the reduction is granted, they should then give the keys back on the day that the tenancy is to end, according to the order.

VCAT may only reduce the term of an 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 respondent if the term was reduced.

Intervention orders and other orders given under the Family Violence Protection Act 2008 (Vic) (“FVP Act”) and the Personal Safety Intervention Orders Act 2010 (Vic) (“PSIO Act”) are generally considered by VCAT to be prima facie grounds (proof) that the applicant has experienced an unforeseen change in circumstances, which will cause the applicant to suffer severe hardship if the applicant:

is excluded from the rented premises under a family violence intervention order; or

is a protected person under a family violence intervention order and is seeking to reduce the term of the agreement to protect their own safety or the safety of their children.

One tenant can apply to VCAT without the support of any remaining co-tenants. VCAT may order that one of several co-tenants is removed from the tenancy agreement, or it may shorten the fixed-term agreement for all of the tenants.

VCAT may determine what compensation, if any, should be paid by the applicant due to the reduction of the fixed term (s 234(3)). In some cases, VCAT may award compensation equivalent to the tenant’s liability for lease-breaking costs. However, in many cases, the amount of compensation is relatively low compared to a standard lease break.

In the case of a section 234 application, a final intervention order or even 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 234 application will not dismissed unless there is unsatisfactory hardship, but the amount of compensation may be scaled to reflect the hardship imposed on each party. If a section 234 application is dismissed, the tenancy is not terminated, and the tenant will need to consider their alternatives such as lease breaking or assignment.

Application for creation of a tenancy 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 tenant, and the all the named tenants disappear, abscond or are deceased; or

if, as a result of a relational breakdown, one party obtains final intervention order with a clause excluding a named tenant.

A person who lives in rented premises as their principal place of residence and who is not a tenant at those premises may apply to VCAT for an order that the landlord enter into tenancy agreement with them (s 232). The person must satisfy VCAT that:

the applicant could reasonably be expected to comply with tenant’s duties under the RT Act; and

the applicant would suffer severe hardship if compelled to leave the premises; and

the applicant’s hardship would be greater than the landlord’s (if the order were made).

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

Creation of tenancy – intervention order

The FVP Act and PSIO Act introduced into the RT Act the power for a protected person named in a final intervention order to apply to VCAT for an order terminating the existing tenancy agreement with a person excluded from the rented premises by the intervention order, and requiring the landlord to enter into a new agreement with the protected person (and other persons named on the application) (s 233A–D RT Act). The applicant must be a party to the tenancy agreement or have been residing in the rented premises as their principal place of residence.

In deciding whether to make such an order, VCAT must be satisfied that:

the protected person (and others) could reasonably be expected to comply with the duties of a tenant under a tenancy agreement;

the protected person or their children would be likely to suffer severe hardship if they were compelled to leave the premises;

the hardship suffered by the protected person would be greater than any hardship the landlord would suffer if the order was made;

it is reasonable to do so given the length of the exclusion under the final order and the length of the existing tenancy agreement; and

it is reasonable to do so, given the other tenants’ interests (other than the excluded tenant) (s 233B).

The new tenancy agreement must be on the same terms and conditions as the existing agreement, as far as possible. VCAT can order an inspection of the premises to determine any liabilities under the terminated tenancy agreement (s 233C). This may relate to adjustments to the bond, damage to the premises, utility bills or other liabilities that may be appropriate to apportion between parties.

Excluded people are prohibited from cross-examining a protected person without VCAT’s permission (s 233D). In such proceedings, it is appropriate to use remote witness facilities. Applicants can have a support person at the hearing.

Applications to VCAT for termination and/or creation of a tenancy agreement on the basis of an intervention order should be made using a protected person application, available on the VCAT website. This is important to ensure the protected person’s address is not inadvertently disclosed.

Parties affected by intervention orders should seek support of the family violence support workers in both the Magistrates’ Court and VCAT.

For more information about terminating or varying a lease due to family violence, see Tenants Victoria’s Family Violence Kit (www.tuv.org.au/family-violence-protection).

Specialist disability accommodation: termination of residency agreements

A SDA residency agreement must be terminated in accordance with the RT Act (s 498ZW). A SDA resident may give notice of their intention to vacate at any time (s 498ZZA). The notice must be in writing and must specify the date the resident intends to vacate the premises. Once the notice is given by the SDA resident or their guardian or administrator, the SDA provider must notify the CEO of NDIA and the Public Advocate. The resident’s guardian or administrator must also be notified if they did not submit the notice.