When Things Go Wrong: Rent Arrears, Disputes & Ending Tenancies (2026)

Most tenancies go smoothly. But when problems arise, following the correct process protects you legally and gets the best outcome. Shortcuts will backfire—self-help evictions, improper notices, and poor documentation lose at NCAT.

This guide covers rent arrears, breaking leases, ending tenancies, final inspections, and bond claims.

This is Part 5 of our 6-part series on self-managing rental properties in NSW.

Quick Summary

• Rent must be 14+ days overdue before you can issue a termination notice
• You must use the correct official notice form for your situation
• NCAT orders are required to end a tenancy if the tenant doesn't leave voluntarily
• Bond claims must be submitted within 14 days of tenancy ending
• The party with better documentation usually wins at NCAT
• Since July 2025, eviction reasons must be registered with the NSW government

Handling Rent Arrears

Rent arrears are stressful, but early intervention and proper process are key. Most late rent is resolved with a quick reminder—formal action is a last resort.

Prevention is Better Than Cure

Set clear expectations at lease signing:

• Exact amount, frequency, and due date
• Your bank details and payment reference
• What happens if payment is late

Use automated reminders: A friendly SMS the day before rent is due prevents most late payments.

Respond early: Contact the tenant on day 1 of late rent. A quick "Haven't received rent yet—can you confirm when you'll pay?" usually resolves it.

When Rent Stays Unpaid

If friendly reminders don't work, follow the legal process:

Step 1: Issue Termination Notice (14+ Days Overdue)

Once rent is 14 days or more overdue, you can issue a termination notice.

Requirements:

• Use the official NSW Fair Trading form
• State the exact amount owed
• Give 14 days notice to vacate or pay
• Deliver the notice correctly (in person, mail, or email if agreed)

Important: If the tenant pays all arrears within 14 days, the notice becomes void and the tenancy continues. You cannot proceed to NCAT.

Step 2: Apply to NCAT

If the tenant doesn't pay or vacate within 14 days, apply to NCAT for:

• A termination order (to end the tenancy)
• A monetary order (for outstanding rent)

How to apply:

1. Create an account on the NCAT website
2. File application for termination and possession
3. Pay application fee ($62 for arrears under $10,000)
4. Attach evidence: lease, bond lodgement, rent records, termination notice with proof of delivery
5. NCAT schedules hearing (usually 3–4 weeks)

Step 3: Attend the NCAT Hearing

Bring:

• Lease agreement and bond receipt
• Complete rental ledger showing all payments, dates, and arrears
• Copy of termination notice and proof it was delivered
• All communication with tenant (texts, emails)
• Calculation of total amount owed

NCAT will usually grant termination if you've followed the process correctly. They give the tenant 14–28 days to vacate.

Note: NCAT considers "relative hardship"—they balance your situation against the tenant's. Consistent documentation strengthens your position.

Step 4: Warrant for Possession (If Needed)

If the tenant doesn't leave by the date in the NCAT order:

1. Apply to Sheriff's Office for a warrant of possession ($434)
2. The Sheriff schedules attendance (usually within 7–14 days)
3. The Sheriff physically removes the tenant if necessary

You cannot lock out a tenant yourself—this is illegal and will result in penalties against you.

Total Timeline and Costs

Realistic total timeline: 8–12 weeks from first overdue rent to possession.

Lost rent during process: At $700/week, that's $5,600–8,400 in lost income—plus you may never recover the debt.

When to Write Off Debt

After the tenant leaves, realistically assess whether to pursue the debt:

Pursue if:

• Amount exceeds $2,000
• You have an NCAT monetary order
• Tenant has traceable employment/assets

Consider writing off if:

• Amount is under $1,000
• Tenant has no assets to recover
• Cost and stress exceeds likely recovery

Most landlords write off small debts, claim as bad debt on tax return, and move on.

Breaking a Lease

Sometimes tenants need to leave before the fixed term ends. NSW law sets out exactly what they owe.

Break Lease Fees (Leases Signed After 23 March 2020)

For fixed-term leases under 3 years, the fee depends on how far through the lease the tenant is:

Example: 12-month lease at $700/week, tenant breaks at 5 months (42% through):

• Break fee = 3 weeks rent = $2,100

The tenant must also:

• Give 14 days written notice
• Pay rent until they vacate (or the notice period ends, whichever is later)

Link: NSW Government - Breaking a Fixed-Term Tenancy Early

Older Leases (Signed Before 23 March 2020)

Different rules apply:

• First half of fixed term: 6 weeks rent
• Second half of fixed term: 4 weeks rent

Leases Over 3 Years

For leases longer than 3 years, you negotiate compensation based on actual costs and losses.

No Break Fee Situations

Tenants can end their lease without paying a break fee if:

• Domestic violence — Tenant or dependent child is affected (with supporting evidence)
• Social housing — Tenant becomes eligible for social housing
• Aged care — Tenant needs to move into aged care
• Property uninhabitable — Due to disaster, fire, or severe damage
• Landlord breach — Landlord fails to meet obligations (e.g., repairs)
• Hardship — NCAT approves termination due to severe hardship

Practical Tips

• Process the break fee promptly—don't delay re-advertising
• The break fee is separate from any bond claims for damage or cleaning
• If the tenant disputes the fee, NCAT can resolve it

Ending a Fixed-Term Lease

When a lease approaches its end date, you have options depending on your intentions.

If You Want the Tenant to Stay

Do nothing: The lease automatically converts to periodic (month-to-month).

Or offer a new fixed term: Negotiate a new 6 or 12-month lease at current (or adjusted) rent.

If You Don't Want to Renew

Under the May 2025 changes, you must have a valid reason to end the tenancy. Give at least 30 days written notice before the lease ends using the official form.

Valid reasons include:

• Property to be sold with vacant possession
• You or family member moving in
• Significant renovations requiring vacancy
• Property no longer to be rented for 12+ months

You must provide evidence supporting your reason, and since July 2025, the reason must be registered with NSW Fair Trading.

Link: NSW Government - Ending a Tenancy

If the Tenant Doesn't Want to Stay

They must give at least 14 days notice before the end of the fixed term.

If Neither Party Gives Notice

The lease converts to periodic. After that:

• Tenant can leave with 21 days notice
• You can end with 90 days notice (with valid reason)

Final Inspection

The final inspection is where most disputes occur. Your documentation from the start determines your success.

Schedule It Correctly

• Schedule for after the tenant has fully vacated and cleaned
• Don't inspect while they're still living there
• Give appropriate notice if they're still in the property

Compare to Ingoing Report

Bring your ingoing condition report and photos. Go room by room asking:

• Has existing wear worsened beyond what's reasonable?
• Is there new damage?
• Has it been cleaned to the same standard as move-in?
• Are all items listed in the condition report still present and working?

Document Thoroughly

Take photos of everything—especially anything you might claim for.

Include:

• Overview shots of each room
• Close-ups of any damage
• Comparison angles matching your ingoing photos
• Date stamp photos (most smartphones embed timestamps automatically)

Cleaning Standard

The property must be cleaned to the same standard as when the tenant moved in.

• If professionally cleaned before, it should be professionally cleaned now
• If you accepted "broom clean," you can only expect the same back
• General dust and minor marks from moving furniture aren't grounds for claims

Bond Claims

If You Agree on Allocation

This is the easy path:

1. Complete bond claim form within 14 days of tenancy ending
2. Both parties sign agreeing to the split
3. Submit to Rental Bonds Online
4. Money distributed as agreed (usually within 1–2 weeks)

Link: Service NSW - Lodge Bond Claim

If You Disagree

1. You submit your claim proposal
2. Tenant refuses to sign
3. Within 14 days of the dispute, one party applies to NCAT
4. Tell Fair Trading you've applied (freezes the bond)
5. NCAT schedules hearing (4–6 weeks)
6. Both parties present evidence
7. NCAT makes binding decision

What You Must Provide to the Tenant

Within 7 days of making a claim, you must give the tenant:

• Copy of the outgoing condition report
• Copies of quotes, invoices, or receipts for claimed work

If you don't provide this, your claim may be weakened at NCAT.

NCAT Bond Disputes

What to Bring

Your evidence:

• Ingoing condition report with photos
• Outgoing condition report with photos
• Regular inspection reports (showing condition over time)
• Lease agreement
• All correspondence about property condition
• Quotes or invoices for repairs/cleaning
• Proof of any pre-existing damage

The standard: NCAT compares the property at move-in vs move-out, considering fair wear and tear for the tenancy length.

Presenting Your Case

• NCAT is informal—you don't need a lawyer
• Be prepared, concise, and factual
• Let your documentation speak
• Don't be emotional or adversarial
• Answer questions directly

Common Bond Disputes

Cleaning

• NCAT's test: Was it cleaned to the same standard as move-in?
• If claiming professional cleaning, prove it was professionally cleaned at the start

Carpet NCAT considers carpet age and tenancy length:

• Carpet under 2 years with stains: Can claim
• Carpet 5+ years with general wear: Fair wear, no claim
• Carpet any age with burns or major damage: Can claim

Wall Marks and Holes

• Small nail holes from pictures: Fair wear
• Larger holes, command hooks removing paint, crayon marks: Damage
• Scuff marks in high-traffic areas: Usually fair wear

Gardens

• If tenant's responsibility (stated in lease), they must maintain reasonably
• Dead lawn from neglect: Claimable
• Seasonal changes or normal growth: Not claimable

Getting Help

Tenants' Advice and Advocacy Services

The Tenants' Union of NSW coordinates local services that provide free advice. While primarily for tenants, they can clarify obligations that affect you as a landlord.

Tenants Advice Line: 1800 251 101

NSW Fair Trading

Free dispute resolution service. They can mediate but cannot make binding orders.

Link: NSW Fair Trading - Disputes

Legal Advice

For complex situations (large debts, multiple issues, unclear liability), consider:

• Community Legal Centres (free, if eligible)
• Private solicitor (expect $300–500/hour)

For most bond disputes under $5,000, representing yourself at NCAT is straightforward and cost-effective.

Key Principles

1. Follow the process exactly — Shortcuts and self-help remedies are illegal and will hurt your case

2. Document everything — The party with better records usually wins at NCAT

3. Act early — Small problems become expensive ones when ignored

4. Stay professional — Emotional responses damage your position and potentially break the law

5. Know when to negotiate — Sometimes accepting less avoids weeks of stress and uncertainty

Stay on Top of It With Propero

Propero keeps your rental ledger, maintenance history, condition reports, and tenant communications in one place—exactly what you need if things ever go to NCAT.

What's Next

This completes the core series on self-managing rental properties in NSW. For tax and financial management, see Tax Guide for Australian Landlords.

Full Series:

1. Is Self-Managing Right for You?
2. NSW Rental Laws Every Landlord Must Know
3. Finding Your First Tenant
4. Day-to-Day Property Management
5. When Things Go Wrong (this post)
6. Tax Guide for Australian Landlords

Sources & Further Reading

• NSW Fair Trading - Ending a Tenancy — Official notice forms
• NCAT - Tenancy Applications — Tribunal process
• Tenants' Union - Eviction — Detailed eviction process
• Tenants' Union - Overdue Rent — Arrears guidance
• Rental Bonds Online — Bond claim portal
• NSW Government - Bond Disputes — Dispute process