What should a landlord do if a tenant wants to break their lease early?

9 June 2022

Generally, a tenant and a landlord are both bound to the tenancy for the whole duration of the fixed term. But there are several reasons why a tenant might want to end their tenancy part way through a fixed-term lease. The article will go over your legal rights, obligations, and costs you can reasonably recoup.

Can tenants request to end the tenancy early?

Yes, they can. Sometimes, life gets in the way, and tenants' circumstances change. But, in the majority of cases, they need to seek the landlord's consent first.

Reasons for termination:

  • Severe hardship

Tenants may be experiencing undue financial hardship that prevents them from continuing with the tenancy. A tenant should apply to the Tenancy Tribunal for help in this case. The Tenancy Tribunal will decide if early termination is appropriate or if the tenancy should continue.

  • Mutual consent

You can cancel the tenancy and/or agree to end the tenancy early. If you manage to negotiate a mutually agreeable arrangement (usually with compromises on both sides), make sure you put it in writing and outline exactly what's been agreed to. As part of this agreement, a landlord can choose to charge a fee (see below what is reasonable to charge a tenant).

  • Assignment

A tenant may choose to transfer their tenancy to someone else. A landlord is legally required to consider all assignment requests and cannot unreasonably turn them down. If the tenant's lease is being transferred to the new tenant, the fixed-term tenancy does not expire, but the existing agreement continues.

Even if the tenant finds a replacement for you, check them out before letting them move in. Remember, it's hard for landlords to terminate agreements. So don't simply rely on your good instincts, do some background checks first.

  • Subletting

A landlord can also agree to allow a tenant to sublet the property.

Note that assigning a tenancy to a new tenant is not the same as subletting, where all of the tenants move out and on-rent it to someone else.

Costs associated with terminating a tenancy early

Terminating a tenancy early can be a costly exercise. The person who wanted the fixed term tenancy to end may have to pay some money to the person who didn't to compensate for their losses. These fees should be actual and reasonable costs.

What is reasonable?

Generally, you may seek compensation for actual expenses incurred, including advertising costs, re-letting fees and lost rent until a replacement tenant is found.

  • Advertising costs
  • Tenant checking fees
  • Rent until replacement tenants are found
  • Meth test (if applicable for the property)

You may be required to provide an itemised list of these expenses, so make sure you keep records of these.

Do note that if a tenant believes that the compensation amount you're seeking is unreasonable, they can dispute it in the Tenancy Tribunal, where the compensation amount will be determined.

What if a tenant stops paying rent?

The tenancy agreement is a legally binding contract. If a tenant doesn't pay rent, they're breaching this agreement's terms. First, communicate with the tenant, explain their legal obligations, and work out the issue. If there was no misunderstanding or the tenant is keeping you in the dark, then ensure the proper steps are followed to begin the dispute resolution process.

The information contained in this article is exclusively for promotional purposes. It does not in any way constitute legal advice and should not be relied upon as the basis for any legal action or contractual dealings. The information is not and does not attempt to be, a comprehensive account of the relevant law in New Zealand. If you require legal advice, you should seek independent legal counsel. myRent.co.nz does not accept any liability that may arise from the use of this information.

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What the community has to say
  • CC

    Fixed term tenancies are unenforceable regardless of the law. All the tenant has to do it say they can't afford it and the Tribunal will side with them. I've had this happen before and it put me in hardship but the Tribunal didn't care about that.

  • HC

    THANK YOU Christine for sharing. Mary

  • HC

    Helen Mary

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