Tenancy Agreements: Can I Break a Lease Early?

Signing a lease on a new apartment or flat can be daunting. After all, these are typically for a year. And a lot can change in a year. You could wind up hating your new place, or your new flatmate. You could get a job offer in a new city. Or, you could even see a drastic change to your finances, impacting your ability to afford rent.

For whatever reason, seeing out a lease isn’t always practical. So, if you need out of your tenancy agreement, can you get out? Canstar guides you through everything to know about breaking your lease early.

Do you have a fixed-term lease or periodic agreement?

The first step is to know what type of tenancy you have:

• Fixed-term lease – you have signed on for a set period of time, usually six months or one year. This lease has a set end date. There is no maximum
• Periodic agreement – has no end date. It simply continues until either the landlord or tenant gives notice to end the agreement.

When signing a lease, it will typically be for a fixed term. That is, there is a set start and end date to your agreement. But, some landlords may agree to a periodic lease. If you’re unsure which you have, check your signed tenancy agreement.

The more common reason for a periodic lease is that you have seen out your fixed-term lease but stayed on afterwards. In New Zealand, if you sign a fixed-term lease for 90 days or longer, it will automatically become a periodic lease upon expiry.

So if you have signed a fixed-term lease, yet have stayed on beyond that, you will currently be on a periodic lease agreement. In this case, breaking your lease is relatively simple. You must simply:

• Give your landlord 28* days’ notice (in writing) informing them of your intention to leave
• If you move out before this date you are still required to pay up to the given date

*If your agreement was signed before February 11, 2021, you’re only required to give 21 days notice.

Always double check

If both parties (landlord and tenants) agree to extend, renew or end the fixed-term tenancy, it will not roll over into a periodic one. So, if you have stayed on beyond your initial fixed-term lease, it may pay to check you have not signed on for another fixed-term lease.

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Ending a fixed-term lease early

According to the Tenancy Services website:

“Fixed-term tenancies can only be changed if the landlord and all the tenants agree. Any agreement should be in writing and should include what’s been agreed to. Both the landlord and tenants should keep a copy of this.”

So, if you intend to break your (fixed-term) lease early, your landlord and all other tenants must agree to it. As part of this process, your landlord can ask you to cover any costs. But these must be the actual, and reasonable, cost your leaving will cause the landlord, and you should be provided with an invoice listing these costs.

Your landlord could charge for:

• Advertisement costs
• Time per hour in regards to hosting viewings
• Administration costs (background checks, drawing up new tenancy agreements etc.)
• Lost rent

A landlord cannot charge you simply for breaking the lease. If your leaving will not cause any financial loss to your landlord, then there should be little, if any, charge for you breaking the lease.

What if the landlord doesn’t agree?

The landlord does not have to agree to end the lease early. If you are on a fixed-term lease, you are legally required to continue paying rent up until the agreed date. However, so long as you cover the costs, most landlords should (in theory) agree.

But should they not, what options do you have?

Assigning the lease

If you want to break your lease early, but your landlord won’t agree, you can look into assigning the lease. Assignment is the process of removing yourself from the tenancy agreement and adding someone new to it. Essentially, finding an individual who will replace you and take over the tenancy.

Recent changes to the tenancy laws mean that if your lease was signed on, or after, February 11th 2021, landlords must consider all requests from tenants to assign the tenancy and must not decline unreasonably. So, while your landlord can refuse to break the lease early, they cannot unreasonably refuse you assigning it to someone else.

Do note that when assigning the lease:

• Any other tenants must also agree to the new tenant
• Your landlord can set reasonable conditions that any new assigned tenant must meet
• Boarding house tenancies cannot be assigned

Assignment can also minimise the cost of breaking the lease. For example, if you find an appropriate new tenant, who can move in immediately or shortly after you leave, there will be little to no loss in rent to your landlord, and you can cut any costs there would have been for viewings and advertising.

Even if your landlord agrees to break your lease, assignment may be a good option to bring down the break fee.

Subletting

While subletting may be an option, it is not ideal. And, if possible, assigning the lease remains a better option. Subletting involves a replacement tenant, like with assignment. But with subletting you remain on the tenancy agreement and remain responsible. So, should the subletting tenant miss rent payments, or cause damage to the property, the responsibility could fall on you.

Subletting requires a new tenancy agreement, between the tenant and the person they’re subletting to. This means that two tenancy agreements are in place for the property at the same time. The tenant must also have the landlord’s permission to sublet.

If the landlord chooses to give notice to end the tenancy of the original tenant, they can, at the same time, give notice to the sub-tenant. If the landlord does not give notice to the sub-tenant, the sub-tenancy continues after the head-tenancy ends. Once the head tenancy ends, the sub-tenancy also ends, and the owner or property manager will take over as landlord of the sub-tenancy.

Financial hardship

A fixed-term tenancy can be ended early on the grounds of financial hardship.

According to the Tenancy Services website:

“If a landlord or tenant has an unexpected change in circumstances they can apply to the Tenancy Tribunal for help. If the applicant will suffer from severe hardship if the tenancy continues, the Tribunal may decide to end the fixed-term early at a date the Tribunal determines is appropriate. For this to happen the hardship of the applicant (if the tenancy continues) would need to be greater than the other person’s (if the tenancy ends early).”

You can also apply to the tenancy tribunal if your rent has increased by a large amount that:

• You couldn’t have expected when signing the tenancy agreement and/or
• Will cause serious hardship.

Family violence

If you are at risk of harm due to family violence in your rental property, there are exceptions to ending your fixed-term tenancy.

According to the Tenancy Services website:

“A tenant who experiences family violence during a tenancy can remove themselves from the tenancy by giving the landlord at least 2 days’ written notice in the approved form (with qualifying evidence of family violence) without financial penalty or the need for agreement from the landlord. This applies to both fixed-term and periodic tenancy agreements.”

Breaking a lease: What happens to your bond?

Even if you break a lease early, the bond should be returned as normal, and in line with the standard process. A landlord cannot refuse to return your bond because you are breaking the lease early. Before returning your bond, any reasonable charges can be taken out to cover damages (this cannot include general wear and tear), and any deductions must be agreed upon and signed by both landlord and tenant.

If you can’t come to an agreement, you can apply to the tenancy tribunal for help.

What happens if you just get up and leave?

If you walk out on your lease without notice, or without paying the appropriate costs, you could wind up in a lot more trouble. You could be taken to the tenancy tribunal, and/or blacklisted from future rentals. So it pays to do things by the book.

If you feel your landlord is being unreasonable

If you feel your landlord is overcharging for breaking your lease, unfairly refusing new prospective tenants, or you have any other tenancy related issues, you can contact the Tenancy Tribunal for help. Here you can gain professional advice and assistance on all tenancy related issues.

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