What to consider when breaking your lease

Breaking a lease isn’t something most people plan to do, but it is sometimes unavoidable.

Understanding your lease agreement and the consequences of breaking it early can help you avoid financial and legal pitfalls.

This guide explores the complexities of terminating a lease and offers practical advice to help you manage the process.

What does it mean to break your lease agreement?

Breaking a lease means terminating your rental agreement before its official end date.

There could be various reasons for breaking a lease, such as getting a new job in a different city, experiencing financial hardship, or having problems with the rental property itself.

Carefully consider your reasons for wanting to break a lease to determine if it’s your best option under the circumstances.

The legal consequences of breaking a lease

In South Africa, two acts govern property rentals: the Rentals Housing Act (RHA) and the Consumer Protection Act (CPA). This legislation covers matters such as the rights and responsibilities of landlords and tenants, lease termination, dispute resolution, and more.

All lease agreements must include an early cancellation clause to comply with legislation. You can cancel a fixed-term agreement in writing, giving 20 business days’ notice. However, an early termination may mean you will have to pay a “reasonable” cancellation fee, usually three months’ rental.

This means there are risks to breaking a lease.

Legally, you’re responsible for rental payments until the term of the lease ends or a new tenant is found. Your landlord may also charge you for advertising and other expenses incurred while searching for a replacement tenant.

Another point to consider is that breaking your lease can harm your credit score if unpaid rent or fees are passed on to a debt collector. You need to weigh up these potential consequences before making your decision.

When does it make sense to break a lease?

In some situations, breaking a lease may be the most sensible option – for example, if the property becomes unsafe, your landlord fails to make necessary repairs, or you need to relocate.

However, breaking a lease without a valid reason may increase the risk of legal action against you.

If you break your lease without proper notification or justification, your landlord could hold you liable to rental payments for the remainder of the lease term, and may even evict you.

Always compare the costs and benefits to determine the best course of action.

How does breaking your lease affect your credit score?

Breaking your lease early can hurt your credit score.

If your landlord can’t find a tenant to replace you, you may be responsible for paying the rent for the remainder of the lease term. If you fail to pay – or don’t pay early termination fees and penalties, should your lease contain such a clause – you could be handed over to a debt collection agency.

Such agencies report unpaid debts to credit bureaus, which may result in a drop in your credit score.

Steps to take before breaking a lease

Before you decide to break your lease, review the lease agreement thoroughly. Understand the required notice period and any clauses related to early termination. You’ll also want to have a clear understanding of your financial obligations.

These steps will prepare you for a smoother transition and help you avoid unnecessary complications.

Notifying your landlord

Communication is crucial when breaking a lease. Inform your landlord as soon as possible and provide written notice, including your reason for breaking the lease and your proposed moving date.

Written communication provides a record of your intentions, which can protect you in a dispute.

Finding a replacement tenant

Many lease agreements include a tenant replacement clause. This means you’re responsible for finding a new tenant to take over your lease if you want to break your rental contract.

While this might seem daunting, it can help you reduce your financial burden.

Work with your landlord to advertise the property and screen potential tenants. Your landlord may charge a fee for this process, so be prepared to cover these costs.

Financial obligations

Breaking a lease doesn’t mean you’re financially off the hook. You may still be required to pay rent until a new tenant is found or the lease term ends. Ensure you clearly understand your obligations to avoid any nasty surprises.

Impact on your security deposit

Your security deposit is at risk when you break a lease. Landlords can deduct unpaid rent, late fees, and costs for any damages from your deposit. You may have to pay the balance if these expenses exceed your deposit amount.

To protect yourself, settle any outstanding rent and fees before moving out.

Negotiating with your landlord

Sometimes, negotiating with your landlord can lead to a mutually beneficial agreement. Explain your situation and propose solutions, such as finding a new tenant or paying a fee for early termination.

Many landlords are willing to negotiate to avoid the hassle and cost of finding a new tenant. Approach these discussions professionally and be prepared to compromise.

How DebtBusters can help when you need to break your lease

Breaking a lease can be a stressful experience that has financial implications.

As a leading debt management company, DebtBusters offers personalised debt solutions to alleviate the financial strain associated with early lease termination. Our expert advisers work closely with you to assess your financial situation, negotiate with creditors, and create a manageable repayment plan.

By consolidating your debts and reducing your monthly payments, DebtBusters can provide the financial relief you need to manage the costs and associated expenses of breaking your lease, ensuring a smoother transition and peace of mind.

FAQs

What are some common reasons people for people to break their lease? 

Tenants may break their lease for various reasons, including job relocation, financial hardship, uninhabitable living conditions, or personal circumstances such as family emergencies.

Can breaking a lease affect my credit score? 

Yes, if unpaid rent or fees are passed on to a collection agency, it can negatively impact your credit score. To avoid this, it’s essential to settle any outstanding payments.

What if my landlord refuses to find a new tenant? 

Your landlord is not obligated to find a new tenant.

If your lease requires you to find a replacement tenant, you may be able to terminate the lease without a penalty. Otherwise, you will be liable for the balance of the rental due and any penalties specified in your lease agreement.

How can I protect myself legally when breaking a lease?

Document all communications with your landlord and provide written notice within the period set out in your lease agreement.

Read up about the relevant laws and regulations regarding lease termination to make sure you’re on the right side of the law. If a legal dispute is likely, consult a legal professional for guidance.

Are there any alternatives to breaking a lease? 

Alternatives include subletting your rental if the landlord allows it, negotiating a temporary reduction in rent, or working out a payment plan with your landlord.