Early tenancy termination rules

Question from lisa updated on 13th August 2014:

Hi there, I have a signed tenancy agreement for a fixed term but have informed my landlord that I will be leaving a month early. I paid a breach of contract fee and an advertisement fee. My landlord says that I must keep paying the rent up the original end date if they do not find anyone even though I have paid the breach of contract. But if I must pay the rent, then I am actually keeping the contract and I am not breaching the contract (hence I shouldn’t have paid the breach fee).

Our expert Alan Bruce responded:

Under the Residential Tenancies Act 1986 (the Act), a fixed term tenancy cannot be ended by either party giving notice to terminate the contract before the agreed end date. Either party can approach the other to see if they are agreeable to ending the tenancy agreement by mutual consent. Any agreement should be in writing clearly stating the terms associated with the tenancy ending earlier. Another option that allows a tenant to exit a fixed term tenancy is a process called ‘assignment’. Assignment is where a tenant wants to leave and have someone else take over their interest in the tenancy. Once a suitable replacement for the tenant has been found, the obligations of the departing tenant(s) continue until the day the assignment takes effect. This includes responsibility for paying the rent as well as anything that happens up until the day the new tenant takes over, but not after that date. A landlord who agrees to an assignment can recover the actual and reasonable costs associated with the assignment of the agreement from the tenant such as advertising costs and credit check fees. In your situation, it may be that your landlord is calling these costs a “breach of contract fee”. If you feel that the costs that you have been asked to pay in order to assign your tenancy exceed what you think are actual or reasonable, you should approach your landlord and ask them to explain what the “breach of contract fee” covers. Visit www.dbh.govt.nz for more information around ending fixed terms early. Phone 0800 TENANCY (0800 836 262) with any specific questions.

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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