This is not the case: the Consumer Protection Act (CPA), which was promulgated to protect consumers from being exploited by suppliers, also applies to lease agreements and gives tenants the right to terminate before the end of the lease period. As a landlord, you are deemed a supplier and your tenant a consumer. It is important to note that the CPA will always trump whatever is recorded in terms of early cancellation in your lease agreement.
The tenant can terminate the lease agreement at any time and is obliged to give the landlord 20 working days’ notice. This means that she may inform the landlord on the 20th of January of her intention to move out on the 20th of February. She may not be penalised unfairly for early termination.
What about the landlord’s rights?
The landlord has the right to recover fair damages that are a direct result of the early termination. For example, many landlords contract a rental agency to find them a suitable tenant at an average cost of one month’s rent. They then pass this placement fee on to the tenant. What is more, a landlord must actually have incurred the costs before he can claim them as damages. If you claim loss of rental income as a result of vacancy you must be able to prove that the property was vacant and that you tried to fill it.
If the tenant feels that she has been unduly penalised, she can refer the matter to the rental tribunal, where the matter may take a long time to be resolved and the outcome may not be in the landlord’s favour.
Our advice to landlords whose tenant has terminated the lease agreement early:
- Be fair
- Don’t be greedy
- Communicate clearly
- Move on: recover any direct damages from the tenant but also spend your energy on finding a new tenant.