How to transfer your lease: A simple guide

On a fixed-term lease and need to move? Don’t fret – breaking your lease is not your only option! Breaking your lease can be incredibly stressful for both the landlord and tenant – but you can avoid this mess by getting your lease transferred. Here’s a simple guide on what you need to know.

If you don't know what "breaking a lease" means or you are thinking of breaking your lease, have a read of this post too - "What are lease breaks, and why can't I just leave my property?".

Before beginning the lease transfer process, it helps to understand your rights and responsibilities to avoid any nasty surprises and unnecessary stress. If you are renting a property, you would have signed a lease agreement at the beginning of your tenancy. A lease is a binding contract containing what your rights and obligations are throughout your time in the rental. If you don’t have a copy, your agent is legally required to provide you one.

A lease transfer is effectively changing that lease from your name and transferring all those rights and obligations to another person who will be taking over the lease.

But be mindful of when the lease transfer begins. Generally, tenants are required to pay their rent a month in advance. Make sure the person transferring onto the lease understands when they need to make their first rent payment to avoid any late payments.

‍Find someone to take over your lease

• In order to transfer your lease, there needs to be someone to transfer it to. Although your landlord cannot unreasonably refuse consent, maximise your chances by finding someone who has a good rental history and the financial capacity to pay the rent on time.
• Most agents will request the prospective tenant receiving the lease transfer to put in an application (same as if you were to apply to any other rental property). Make sure the prospective tenant provides supporting documents such as payslips and rental receipts to support your request and remove any doubt of your ability to be a reliable tenant.

Get written consent from your landlord

• You must get written consent from your landlord if you want to transfer your lease. Verbal consent through a phone call or a face to face meeting will not be sufficient. If you try to transfer your lease without your landlords’ written consent, it will be invalid and void.

By law, a landlord must not unreasonably withhold consent for a lease transfer. If a tenant believes their landlord has unreasonably withheld their consent, they may apply to VCAT. VCAT will hear from both parties and will either:

• Decide that consent is not required and let the lease transfer go ahead without the landlord’s consent; or
• Decide that it was not unreasonable to withhold consent and uphold the denial of the lease transfer, disallowing you from transferring your lease.

What exactly does it mean to ‘unreasonably withhold consent’? Unfortunately, there is no solid definition. Factors VCAT may consider include the prospective tenant’s ability to pay rent and their previous rental history.

Your landlord may require you to pay an administration fee for the reasonable costs of preparing a new lease. Your landlord cannot charge you a fee for them to consent and they cannot refuse giving their consent to the transfer of your lease because you have refused to pay the fee. But what happens if you have already paid a fee to your landlord for their consent? If this is the case, then you can apply to VCAT to get an order for the landlord to refund the fee.

Like the lease, the bond needs to also be transferred. This does not happen automatically. To transfer your bond, your landlord or agent will need to submit a tenant transfer with the Residential Tenancies Bond Authority (RTBA). Once the transfer has been submitted, all tenants will receive an email from the RTBA where they will need to accept the transfer. Once all parties have accepted the transfer, the bond has officially been transferred.

But beware, transferring your bond through the RTBA only transfers the name, NOT the actual money. The transfer or exchange of the actual bond money is the responsibility of the transferor and transferee to do themselves. This means that the person transferring into the lease must provide the bond money to the person transferring out of the lease. It is critical to ensure that both parties of the lease transfer are aware of this. If you are leaving the property, do not agree to the transfer of the names on the RTBA records before you've received the money from the person taking over!

It is not uncommon for one of the tenants on a lease to transfer their tenancy to someone else. This is referred to as transferring co-tenancy. The process for transferring co-tenancy is the same as a full lease transfer (as explained above).

Essentially, instead of the whole lease being transferred from one person to another, a co-tenancy transfer only transfers the rights of the person transferring out with the person transferring in. The tenants on the lease who were not involved in the transfer will not be affected.

If you are undergoing a co-tenant transfer, be mindful of how the bond is divided. The RTBA will only transfer the names on the bond. However, like a full lease transfer, the exchange of bond money is a private matter that needs to be worked out between tenants.

The bond is generally divided between tenants in co-tenancies. As a tenant transferring in, ensure you know how much bond you are responsible for. A bond is not always divided equally between tenants. As a tenant transferring out, make sure you have clearly communicated with the person replacing you how much bond they are responsible for to prevent any issues arising and to ensure you get the amount of bond you initially contributed back.

We hope this has cleared up some of the ins and outs of lease transfers – stay tuned for more helpful tenancy tips and blog articles!

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