31 July 2024
There are always so many questions regarding what can be claimed against a Tenant should they require to terminate a Lease Agreement before the natural expiry. Navigating the early termination of a lease agreement can be complex for both landlords and tenants. Understanding your rights and obligations is crucial to ensure a smooth transition and to mitigate potential disputes. At Rawson Rentals, we are committed to providing clarity and support to our clients throughout their rental journey.
In South Africa, we are governed by two Acts when renting a property, namely, the Rentals Housing Act (RHA) and the Consumer Protection Act (CPA). Under these, the CPA allows a consumer (in this case the Tenant), the right to cancel the fixed term agreement, in writing, giving 20 business days notice , however, the consumer will be held liable for the ‘reasonable penalty’ associated with this early termination. All Lease Agreements must include an early cancellation clause to be compliant with the CPA.
What Tenants and Landlords need to consider when a Lease Agreement is terminated early:
As a Tenant you can be held liable for a reasonable early cancellation penalty fee when giving notice to terminate a Lease Agreement before the natural expiry. This early cancellation penalty fee must be stipulated in writing in your Lease Agreement and can not be an amount that might prohibit the Tenant from canceling the Lease Agreement early. It is important to remember that the early cancellation penalty fee only comes into effect once the Tenant has vacated the premises
and there is no longer a rental income. Should a replacement Tenant be found and a new Lease Agreement signed for the same period or longer, then there will be no financial loss to the landlord and the early cancellation penalty will fall away. Please keep in mind that should a suitable replacement Tenant be found, the current Tenant will still be held liable for the advertising cost associated with finding the replacement Tenant.
The early cancellation fee will include any loss that the Landlord may incur due to loss of rental, any commission paid to an agency, and any advertising costs to find a replacement tenant. Should there be any damage to the property identified during the outgoing inspection, this would be charged separately against the damages deposit and dealt with in accordance with the Deposit clause in the Lease Agreement.
At Rawson Rentals, we understand the intricacies involved in lease agreements and the potential challenges of early termination. Our team of experienced professionals is dedicated to guiding both landlords and tenants through these processes, ensuring compliance with legal requirements and fostering positive rental experiences.
Whether you're a tenant considering early termination or a landlord navigating the implications, Rawson Rentals offers comprehensive support, including:- Expert Advice: Personalised guidance tailored to your unique situation.
- Efficient Marketing: Effective strategies to quickly secure new tenants and minimise vacancies.
- Transparent Communication: Clear and open discussions to ensure all parties are informed and confident in their decisions.
