Do’s and don’ts of terminating a lease before expiry 

If the tenant chooses to cancel a lease prior to the expiry of the initial period for a reason other than a material breach of the lease by the landlord, then the following will apply: 

• The tenant must give the landlord at least 20 business days written notice of such cancellation; and 

• The landlord shall be entitled to recover any loss suffered by the landlord as a result of such early cancellation of the lease by charging the tenant a reasonable cancellation penalty, which should ideally have been recorded/agreed upon in the lease agreement. The leases that Spencer has signed with his tenants and landlords allow for a minimum of two months and a maximum of three months penalty. 

The tenant need not be required to give the landlord any reason for cancellation, as long as the tenant is prepared to pay the two to three-month penalty. 

Previously one couldn’t get out of a lease, if for instance you were being relocated for work-purposes, but the Consumer Protection Act now gives you this option. 

Please note: the penalty calculation can be made only once a replacement tenant has been found. Should a new tenant take immediate occupation, the landlord cannot make a financial gain from the previous tenant’s cancellation. The landlord will then be permitted to claim only a percentage of the agency fee paid in advance. 

Cancellation of a lease by the landlord before expiry of the initial period 

It’s advisable to include a clause permitting the landlord to cancel the lease with two months written notice on the following conditions: 

• The landlord intends to move into the premises; or 

• The landlord intends to sell the premises. 

If no clause exists, then the landlord cannot cancel the lease, unless of course the tenant is in breach of it. 

Both of the scenarios above, be it the 20 business days’ notice by the tenant, or the two months’ notice by the landlord, need not necessarily be given on the first or last day of the month. Notice periods can be given anytime during the month. 

These provisions apply only if the Consumer Protection Act has application to the lease. 

With expert guidance and local market knowledge and more than 300 lease agreements behind him, Spencer can help you navigate the complexities of terminating a lease agreement in a way that is fair to both tenant and landlord. 

Call Spencer on 084 524 4616 or email spencer@yourealty.co.za