The mandatory break fee in NSW
In New South Wales, a tenant who ends a fixed-term residential tenancy early may have to pay a break fee under clause 117 of the Residential Tenancies Regulation 2019 (NSW). For most standard fixed-term agreements of 3 years or less, the Residential Tenancies Act 2010 (NSW) and the Residential Tenancies Regulation 2019 (NSW) set a mandatory break-fee schedule based on how far through the fixed term the tenancy is when it ends:
- 4 weeks' rent if less than 25% of the fixed term has expired
- 3 weeks' rent if 25% or more but less than 50% has expired
- 2 weeks' rent if 50% or more but less than 75% has expired
- 1 week's rent if 75% or more has expired
The mandatory schedule applies to fixed-term agreements of 3 years or less that were entered into on or after 23 March 2020. For older agreements, fixed terms longer than 3 years, or non-standard agreements, different arrangements can apply. The agreement itself and the current NSW Fair Trading guidance are the place to check.
How the break fee changes the picture
The break fee under clause 117 of the Residential Tenancies Regulation is significant because it is, in most cases, the set amount payable for ending the fixed term early. Where the mandatory fee applies, a tenant generally is not separately liable to keep paying rent indefinitely until a new tenant is found. The fee is the defined cost of leaving early. This is different from open-ended "pay until re-let" liability that can apply in some other situations.
A tenant ending a fixed-term agreement early would typically give the landlord or agent notice in writing and arrange to return possession. The break fee can be deducted from, or claimed against, the bond under section 166 if it is not otherwise paid (see the related bond guide below).
Ending a tenancy early without a break fee
The Residential Tenancies Act 2010 (NSW) also recognises circumstances where a tenant can end a tenancy early without paying the break fee, including (among others):
- The tenant or a dependent child is in circumstances of domestic violence (special provisions allow ending a tenancy immediately with the right documentation).
- The landlord is in breach of the agreement in certain serious ways.
- The tenant successfully applies to NCAT on grounds such as hardship under section 100.
Each of these has its own conditions and notice requirements set out in the legislation.
Where to confirm the current rules
NSW Fair Trading publishes current information on ending a fixed-term tenancy early, including the break-fee schedule and the notice forms. The NSW Civil and Administrative Tribunal (NCAT) deals with disputes about early termination. This guide describes the framework in general terms. It is legal information, not advice about any particular tenancy.