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What Happens if a Tenant Wants to Break Their Fixed Term Lease in NZ?

February 20, 2024

Entering into a fixed-term lease agreement is a commitment for both tenants and landlords in New Zealand. However, situations may arise where tenants find themselves needing to break the lease before its expiration. In this guide, we'll explore what happens when a tenant wants to break their fixed-term lease in New Zealand and the rights and responsibilities of both parties.

Step 1: Review the Lease Agreement

The first step for tenants considering breaking a fixed-term lease is to thoroughly review the lease agreement they signed with the landlord. Look for any specific clauses or provisions that address early termination and the associated penalties or procedures. Some leases may include break-lease clauses that outline the steps and costs involved in terminating the lease early.

Step 2: Communicate with the Landlord

Tenants should have an open and honest conversation with their landlord about their intention to break the lease. It is essential to provide valid reasons for early termination, such as relocation for work or personal circumstances. Discussing the situation with the landlord may lead to a mutually agreeable solution, such as finding a replacement tenant or negotiating an early termination agreement.

Step 3: Find a Replacement Tenant

In New Zealand, tenants have the option to find a replacement tenant to take over the lease. However, this is subject to the landlord's approval. If a suitable replacement is found, the tenant can propose the potential new tenant to the landlord, who will assess their suitability. We can help by employing a strict screening process which ensures you let your property to the best 1% of tenants.

Step 4: Consider the Financial Considerations

Breaking a fixed-term lease may come with financial implications for the tenant. The landlord may charge fees related to advertising, re-letting, or loss of rent until a replacement tenant is found. Additionally, the tenant may still be responsible for paying rent until a new tenant is secured or until the fixed term of the lease ends. Tenants must understand their financial obligations and negotiate with the landlord to minimise any potential financial burden.

Breaking a fixed-term lease in New Zealand can be complicated. The Rent Shop can support with tailored Landlord Services to grow your wealth and protect your investments. Our range of services includes everything from full Property Management to solely finding you a tenant. Contact us today to find out more.

Alex Watson
Chief Executive Officer