Fair breaking lease fee?

Question from Natalie updated on 29th June 2012:

We are currently in the process of negotiating a fixed term tenancy through a real estate agent. We have purchased a property and have requested we break our fixed term tenancy. They are requesting a fee of $250 to contact the landlords for a yes or no answer and email charges etc. We are happy to pay for periods of non tenancy etc but is a $250 charge for contacting landlords justfied?

Our expert Juliet Robinson responded:

You have entered a contract to rent a property for a fixed term. Now you want to break that contract because you have purchased a house. You didn’t have to purchase the house, it was your choice. Similarly, just because you own the house does not mean you have to live in it. You could rent it out until you are ready to live in it. A fixed term tenancy is attractive to landlords, property managers and tenants alike because it gives all parties certainty. That certainty allows them to make plans and to carry on business in the knowledge that you will remain in your house for the term of that tenancy. Now you want to change the rules. You are saying that you are willing to compensate the landlord for loss of rent but you are unwilling to pay the property manager to compensate for the additional work that they must incur as a result of your decision to break your agreement. It is a tenet of our law that whoever breaks a contract should bear the losses arising from that breach. In this light it seems quite fair that the real estate agent should be able to charge you for the additional, unforeseen work that is arising from your request to break your tenancy. It is work that would not have arisen if you decided to sit through your entire tenancy. The agent’s alternative is simply to refuse a break of your tenancy and instead to enforce the contract. If your rent liability to the normal end of your tenancy is more than $250, you are far better off by working with the agent than by disputing a fair remuneration for extra work caused for that agent by your request to break a contract.

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