As of July 1st, 2024, South Australia has introduced significant changes to the Residential Tenancies Act, particularly concerning how break lease situations are handled. These changes directly impact what tenants are financially responsible for when they choose to end their lease early. Let's break down the key points landlords need to be aware of.
Re-letting Costs
- Early Termination: If a tenant breaks their lease within the first quarter of their tenancy, they are liable for the full cost associated with re-letting the property.
- Later Termination: If the lease is broken after the first quarter, the tenant's liability is calculated on a pro-rata basis, as outlined by SACAT. Essentially, the tenant's responsibility diminishes as the original lease term nears its end. It's important to understand that the final amount can only be determined once a new tenant is secured.
Loss of Rent
The new legislation also caps the amount of rent a tenant is liable for during the vacancy period:
- Leases with less than 24 months remaining: The tenant is responsible for a maximum of one month's rent.
- Leases with more than 24 months remaining: The tenant is responsible for one month's rent for every 12 months left on the lease, up to a maximum of six months' rent in total.
Caution When Re-marketing
A crucial point for landlords to remember is that a lease remains a binding agreement until the tenant has vacated the property. It's essential to exercise caution when re-marketing a property during a break lease situation. Advertising too early could lead to complications if the tenant decides to stay, potentially leaving you with two tenancies for one property.
We're Here to Help
Navigating these new regulations can be complex. If you have any questions or need assistance with a break lease situation, reach out to our experienced advisory team.