LIFESTYLE

Want To Cancel Your Residential Lease Early? You May Suffer Penalties

Your landlord is allowed to impose penalties on you for moving out too soon.

03/10/2017 12:42 SAST | Updated 03/10/2017 12:42 SAST
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Lease agreements can be cancelled prematurely.

You have just been appointed to a higher position in another city and you need to cancel your rental lease. Only problem is, it's before the agreed termination date. You are well within your rights to cancel, but here are a few things to consider.

Under the Consumer Protection Act (CPA), which came into effect in 2011, a tenant must give a landlord 20 days' notice if they want to cancel the lease before it expires. However, this may be subject to "a reasonable cancellation penalty".

According to Legal Advice, costs such as those of advertising and commission paid to letting agents can be charged to the tenant as part of the penalty.

What can be considered reasonable?

The CPA has a list of factors that must be taken into consideration. These include:

  • The rental amount the tenant owes to the landlord up to the date of cancellation
  • The value of the lease transaction up to the date of cancellation
  • The length of notice of cancellation provided by the tenant
  • The reasonable potential of the landlord, acting diligently, to find an alternative tenant between the time of receiving the cancellation notice and the time of the cancellation
These provisions aren't intended to recklessly penalise the tenant.

According to attorney Roy Bregman, these provisions aren't intended to recklessly penalise the tenant, but instead recover any actual loss suffered by the landlord because of the cancellation.

Consequently, your landlord cannot just make up high penalty figures. Consulting a property attorney to help negotiate the termination of your lease may assist to prevent this.

Furthermore, you have every right as a tenant to lay a complaint with the Rental Housing Tribunal if you feel the penalties are unreasonable.

Alternatively, in the event of an early cancellation of a lease, a landlord might agree to a tenant finding a replacement tenant or subletting the property for the remainder of the lease. But this is totally up to the landlord.

Property experts caution that if you sign a rental lease, make sure there is a cancellation clause that clarifies what would happen in the event of a cancellation.