Early Termination of a Lease Agreement Landlord and Tenant rights

There are always so many questions regarding what can be claimed against a Tenant should they require to cancel a residential Lease Agreement before the natural expiry. In this article, we will cover what is expected from a Landlord and a Tenant when dealing with early cancellation.

In South Africa, we are governed by two Acts when renting a property: 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 in writing. However, the consumer may be held liable for the 'reasonable penalty' associated with this early termination.

What Tenants and Landlords need to consider when a Lease Agreement is cancelled 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 its natural expiry. This early cancellation penalty fee may be stipulated in writing in your Lease Agreement. It cannot be an amount that might prohibit the Tenant from cancelling the Lease Agreement early. Should a replacement Tenant be found and a new Lease Agreement signed for the same period or longer, there will be no financial loss to the Landlord, and the early cancellation penalty will fall away. Please also remember 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, including the pro rata placement commission damages suffered by the Landlord.                                          

The early cancellation fee will cover any loss that the Landlord may incur due to loss of rental 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 per the Deposit clause in the Lease Agreement and last month's utility charges.