COVID-19 Lease Update

The ability of a tenant to break their lease during the COVID-19 emergency period raises questions from landlords and tenants.

Below are commonly asked questions. The responses have been provided by REIWA.

Break lease policies

Can the tenant terminate the tenancy?

Yes, the tenant during the emergency period can terminate the tenancy agreement:

If the tenant is suffering financial hardship, then 21 days’ notice can be provided to terminate the tenancy. [section 20(2) of the Residential Tenancies (COVID-19 Response) Act 2020]
Under the current provisions of the family and domestic violence provisions of the RTA [s18]
If the tenancy is periodic, then by providing 21 days’ notice [section 20(1)(a)(i)] of the Residential Tenancies (COVID-19 Response) Act 2020}.

Can a tenant, in a fixed term lease, break lease at no cost if they are not suffering from financial hardship caused by the economic effects of the COVID-19 pandemic?

No, the tenant does not have that right.

Note: the wording in s20. is not ideal and a court faced with making a decision would revert to the intent as provided by the government in the parliamentary debates.

Can the lessor claim financial damages associated with the break lease from a tenant who is suffering the financial effects of the COVID-19 pandemic?

No.

What about outstanding rent that has accrued prior to the termination date?

Remains a debt owing to the lessor that if not paid can be claimed through the Magistrates Court.

Can the lessor claim financial damages associated with the break lease from a tenant who is not suffering the financial effects of the COVID-19 pandemic?

Yes.

At Empire Property Solutions we have noticed minimal impact to tenant’s ability to service rental payments. Enquiry from landlords and tenants at the beginning of the pandemic was high, however many questions have been answered by the government and policy implemented.