"Doubtful" on tenancy hardship

Quinlan asks:
(updated on Thursday, November 06th 2014)

We signed a fixed-term agreement for 12 months with a person from overseas. His plan was to have a house built and to fly in and fly out periodically over the year. Then 34 days into the term he says he has purchased a house and would be moving out after 78 days. He offered to pay two months extra rent but the agreement states that the tenant shall not assign or sublet the tenancy. The Tenancy Tribunal says it may terminate a tenancy where the landlord or tenant has suffered a serious unforeseen change in circumstances which would cause them hardship to continue with the tenancy. In your opinion would this situation rise to this? Thanks for your advise with this. Terry

Our Experts Answer:

It is doubtful that the Tenancy Tribunal could support this tenant’s request to break a fixed term tenancy owing to “an unforeseen change in the applicant’s circumstances”. Section 66(1) of the Residential Tenancies Act requires that the change in circumstances be unforeseen and that the “serious hardship” caused by this unforeseen change must be greater than the hardship suffered by the other party. Even then, the Tribunal may award the other party an amount “by way of reasonable compensation for any loss” that the other party suffers as a result. I expect a tenant would find great difficulty in trying to convince the Tribunal that a conscious and deliberate decision to buy a house causes “an unforeseen change” in their circumstances. Nevertheless, from a practical point of view, you may like to prepare for re-letting and try to minimise your rent shortfall if the tenant should move out as planned. This should bolster your position if you eventually get to a Tribunal hearing.

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