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The Landlord's Guide To Renting

Part 4 – Quiet Enjoyment.
Tenants breaking a lease


Landlords cannot enter a rental property without good reason.

Inspections must be notified in advance because Tenants are entitled to their privacy.

Tenants are allowed to break a lease before the fixed term ends.

Landlords may dispose of a tenant’s goods which are abandoned when they move out.

This newsletter sets out the rules around quite enjoyment and tenants breaking a lease.


Quiet enjoyment

All leases contain this guarantee to the tenant - quiet enjoyment.

Think of this guarantee as a Do Not Disturb sign hanging on the front door knob.

As clause 14 of the standard Residential Tenancy Agreement puts it –

The landlord agrees not to interfere with the reasonable peace, comfort or privacy of the tenant in using the residential premises.

Quiet enjoyment does not prevent a landlord from contacting a tenant. In Tribunal decision 2009/330, the landlord had left text messages for unpaid rent during working hours, which were not received by the tenant until the early hours of the next morning for technical reasons. Also, the landlord made a phone call about a cable hanging down from the home unit to the garage. The tenant complained of harassment. The Tribunal ruled that the landlord had acted reasonably in texting and in telephoning during working hours.

Quiet enjoyment is the reason why there are rules for the landlord to observe when it comes to keys and inspections.
 

Keys

At the start of a tenancy, the tenant is handed the keys, opening devices (swipe cards, remote controls) and access codes, free of charge. This entitles the tenant to be in occupation with quiet enjoyment.

Many landlords photocopy each and every key and device and have the tenant sign a receipt, to minimise disputes with the tenant later on about the replacement cost of lost keys and devices. The landlord is entitled to keep a duplicate set of keys and devices.

Both landlord and tenant have the right to change a lock or security device if they have a reasonable excuse. A tenant has a reasonable excuse for changing locks if their former flatmate or visitor has not returned their key, or if the landlord has harassed the tenant or if a ‘creepy landlord’ has been using their key to enter unannounced. If so, the tenant must give a copy of the new key or opening device to the landlord within 7 days of the change.

The landlord must keep the premises secure. This means that the locks and security devices must be in working order. In high crime areas, security doors and bars may need to be installed. Window locks will help tenants to pay less for contents insurance.

A tenant must have the landlord’s permission to install additional locks or security devices. A landlord may refuse permission because of fire safety if the locks and security devices are to be installed on the sole exit door.
 

Inspections

A tenant must allow entry for general inspections, sale and new tenant inspections, and give access for repairs and urgent inspections, provided that a landlord gives the required entry notice. The entry notice is often given by telephone, and confirmed shortly beforehand because some tenants like to be present during inspections.

General inspections A landlord must give at least 7 days’ notice for a general inspection or valuation. A landlord is limited to 4 general inspections every 12 months. Often these are used to prepare a condition report upon the property, but can be used for any purpose.

Sale inspections A landlord must give at least 14 days’ notice before the sale inspections are to start. Two open houses per week are permitted on agreed days and at agreed times. If the property is sold during a periodic lease (as opposed to a fixed term lease), the landlord may end the lease by giving a 30 day termination notice.

New tenant inspections During the last 14 days of a fixed term or notice period, the landlord may show the premises to prospective tenants, provided they give reasonable notice.

Necessary repairs and urgent inspections A landlord must give 2 days’ notice for access for necessary repairs, and urgent inspections for health and safety reasons. No notice is needed for emergency repairs.

Inspections and repairs are limited to 8.00am and 8.00pm, Monday to Saturday.

The failure to give notice can have consequences. In Tribunal decision 2012/96, the tenant had given 14 days’ notice to terminate the lease because the landlord had entered the premises for inspections using their own key without prior notice. The Tribunal decided that the tenant was entitled to do so and the landlord was not entitled to any compensation for the tenant breaking the lease in reliance upon the notice.
 

Compensation for breaking a fixed term lease

A tenant is liable to compensate the landlord if they break a fixed term lease by moving out early. The tenancy ends the day when the tenant vacates and the keys and opening devices are dropped off, or if the premises are abandoned, the day when the landlord re-enters.

A tenant can either pre-agree to a break fee or leave the break fee amount to be calculated when a new tenant starts their lease. The break fee is payable regardless of whether or not the tenant gives notice. It is sensible for a tenant to give notice to put a stop to the rent.

The break fee is payable in addition to the rent payable up to the date the tenancy ends.

Clause 41 of the standard Residential Tenancy Agreement sets out a pre-agreed break fee payable by the tenant if the lease term is up to 3 years:

  • a flat fee of 6 weeks rent - if less than one half of the term has expired; or
  • a flat fee of 4 weeks rent - if more than one half of the term has expired;

If the lease term is more than 3 years, the amounts are as agreed.

The clause 41 break fee is set by the Tenancy Law. It is payable even if the landlord re-lets the premises quickly and makes a ‘profit’. The break fee applies in lieu of compensation for loss of rent until the premises are re-leased, re-letting fees and advertising costs.

The tenant is not liable to pay the break fee if the tenant has terminated the lease because of the landlord’s breach, or because the premises are damaged by fire or flood or are storm damaged and become uninhabitable, or for special reason such as a court order or an offer of social housing or a place in an aged care facility or hardship.







Abandoned goods left for Council clean-up on the foot path and nature strip outside a block of home units in Sydney.





 

Landlords and tenants can leave the break fee to be calculated to cover the actual loss by deleting clause 41. For the landlord to claim the actual loss of rent until the premises are re-rented, re-letting fees and advertising costs, they must show that they have taken all reasonable steps to mitigate their loss. A landlord has not taken reasonable steps to mitigate their loss if the premises are not advertised for lease or are not rentable because of renovation. The landlord may advertise for a higher rent, so long as they reduce the rent to the amount under the “old” lease if they do not find a tenant reasonably quickly. If the landlord has not taken all reasonable steps to mitigate their loss, they will be restricted to the same amounts as if the clause 41 break fee applied.

In Tribunal decision 2012/49, the tenant signed a 6 months lease, paid a rental bond and paid 3 months’ rent in advance. The tenant changed his mind and did not move in. He claimed a refund. The Tribunal ruled that the tenant was entitled to a refund of the rental bond. Clause 41 had been deleted and so the break fee was to be calculated. The landlord demonstrated that despite reasonable advertising, the rental premises remained unrented for over 3 months because the house was unique in style, and was therefore difficult to let. The Tribunal ruled that the landlord was entitled to keep the 3 months rent paid in advance as compensation for the loss of rent for the tenant breaking the lease.

In situations where clause 41 is deleted, most landlords charge their usual re-letting fees and advertising costs, and agree with the tenant the deduction from the rental bond. But if the dispute goes to the Tribunal, only a percentage of these fees and costs will be awarded. In Tribunal decision 2012/183, the tenant abandoned the premises with 4 months of the 4 year term remaining. There was no pre-agreed break fee clause in the lease and so the Tribunal awarded the landlord only 8.5% of the re-letting fee and advertising costs, the percentage being 4/48ths of the term.

These days, many tenants prefer to continue in a periodic lease rather than renew a fixed term lease because they can give 21 days’ notice and pay no break fee when they want to move out. The tenant has security because the landlord must give 90 days’ notice to terminate the lease (except in the case of sale where the notice is 30 days).
 

Disposal of abandoned goods

The Tenancy Law gives landlords clear rules to follow to dispose of goods abandoned by former tenants. Provided the landlord follows the rules, the landlord will not be liable to compensate the tenant for the value of the goods or for having disposed of them.

perishable goods - the landlord is authorised to dispose of perishable goods and rubbish such as old newspapers, perishable food, dying pot plants and broken furniture immediately. No prior notice needs be given to the tenant.

goods other than perishable goods or personal documents – the landlord must give the former tenant 14 days’ notice that furniture, clothing, personal effects and so forth will be disposed of unless claimed. The notice may be mailed, given in person or stuck to the front door. 14 days afterwards, the landlord may dispose of these goods without liability. The landlord may charge an occupation fee for up to 14 days for storing the goods in the premises. Leased goods should be returned to the rental company. The rest may be donated to charity, put out for the free Council clean-up or pick-up, kept in the premises (e.g. curtains) or sold. Experienced landlords will photograph goods before disposing of them.

The goods must be stored in a safe place. In Tribunal decision 2012/302, the Tribunal ordered the landlord to compensate the tenant $1,630 for damage caused in the removal process and while the goods were stored on a flat top truck covered by a tarpaulin.

personal documents – the landlord must give the former tenant 90 days’ notice to collect their personal documents. Personal documents can consist of a birth certificate, passport or other identity document; bank books or other financial statements or documents; photographs, medals, trophies and other personal memorabilia; licences or other documents conferring authorities, rights or qualifications.

If the tenant’s personal documents have not been collected within 90 days, then they may be returned to the authority that issued the documents, or must be stored safely for 6 years for the tenant to collect.


The Landlord’s Guide to Renting has been produced by Cordato Partners Lawyers, as part of its Property Law practice. It contains a brief outline of the Tenancy Law.

Because it is a general guide, is not intended to be relied upon for any specific tenancy situation. For those situations professional advice should be obtained.

If you would like to receive the Guide as a pdf email attachment rather than as a hard copy, or would like further hard copies of the Guide to distribute to clients, friends and relatives -
Contact us by email – info@propertyinvestmentlawyer.com.au or by phone (02) 8297 5600 (speak to Sally Wade). Our office is located at Level 5, 49 York Street, Sydney NSW 2000 (near Wynyard Station).

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