Breaking fixed term lease

Question from tina updated on 24th May 2019:

I am enquiring about breaking a fixed term contract due to martial separation. My partner and I have a rental property. We have a tenant that has a fixed term lease until half way through next year. However, due to our unexpected split, we are looking to sell up and my partner will move into the rental as his new home. Due to our circumstances, and it being on a fixed term, is there any way out of the fixed term with our tenant? We can’t wait for to long to sort out our finances!

Our expert Jennifer Sykes responded:

Under the Residential Tenancies Act, neither party to a fixed-term tenancy can give notice to end the agreement before the end date. However, a fixed-term tenancy may be ended early by mutual agreement of all parties on the agreement. It is recommended that any agreement reached is documented in writing.

If you are unable to sort out the matter between yourselves, you can apply for an Order of the Tenancy Tribunal for a reduction of the fixed term tenancy. You will need to demonstrate as part of your application that the situation has come about due to unforeseen change in circumstances that would cause the landlord severe hardship.

Further, you will need to demonstrate that the landlord will suffer more hardship than the tenant if the tenancy agreement is not ended early. If the term is reduced the Tribunal may order the applicant to pay the other party reasonable compensation for any loss or damage that would result.

For more information on the rights and responsibilities of landlords and tenants who want to end their fixed term tenancy earlier, go to https://www.tenancy.govt.nz/ending-a-tenancy/ending-a-fixed-term-early/. You can also subscribe to our e-newsletter Tenancy Matters here.

The Ministry of Business, Innovation and Employment provides information and guidance on building law and compliance, services including weathertight homes, and advice for tenants and landlords.

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