It is not always possible to see out the full term of your lease agreement and there may come a time when you need to cancel it for whatever reason. Not following the correct procedure can be costly though, says Tiaan Pretorius, manager for Seeff Centurion.
Cancellation of residential lease agreements are governed by the CPA (Consumer Protection Act) and the RHA (Rental Housing Act).
Rochelle Holland, rentals manager for Seeff Sandton advises that in the case of a fixed term natural lease the tenant may cancel by providing 20 business days’ notice subject to a reasonable penalty fee. In the case of a month-to-month lease, a calendar months’ notice (30 days) can be provided by either party.
Pretorius says provided the cancellation is done correctly, the landlord must accept it and cannot insist on the balance of the rental payments for the rest of the lease period, but would be entitled to reasonable cancellation costs.
This would include loss of rental income between the current tenant leaving and a new tenant starting their lease plus procurement costs of a new tenant, including advertising expenses. He says it is advisable that this is provided for in the lease agreement to avoid issues arising.
The landlord also cannot withhold the deposit if the cancellation is done correctly, unless there is property damage caused by the tenant. Pretorius recommends that in addition to a maintenance fund, the landlord should keep a reserve to cover an unlikely case of a property being vacant while waiting for the next tenant.
John O’Reilly, rentals manager for Seeff Randburg says tenants must read their lease agreement carefully and ensure they understand all the conditions and responsibilities including what costs may be applicable.
There are various ways in which the landlord can protect itself against potential losses due to cancellation. Pretorius says an experienced rental agency can provide a lease agreement that protects their interest and complies with the CPA and RHA regulations. This can ensure that situations such as a cancellation costs as little as possible, or could even be a non-event if a replacement tenant is found quickly.
