If a tenant cancels his lease before the end date of the contract, the landlord can decide to either a) accept this cancellation or b) treat it as a repudiation of the contract and claim for damages. If the landlord decides to claim for damages, the tenant is likely to lose his deposit but can also be sued for the remainder of the rental due for the lease period.
The tenant is, however, able to receive his full deposit refund (if there are no damages) and be released of any claims of future rental if the landlord agrees to just cancel the existing lease and finds a replacement tenant immediately.
While the Consumer Protection Act is often quoted in cases of whether a landlord is able to claim the full rental for the remainder of the lease, it has to be remembered that although the tenant is given the choice of terminating his lease, giving 20 working days’ notice, the Act also says that the landlord is able to recover the costs of cancellation and is able to charge a “reasonable” penalty. The term “reasonable” is subjective in that it would be reasonable to one person to pay one month’s rent whereas another might say it will take three to six months to find a good tenant, but the landlord has to prove his claim by providing invoices and proof of advertising.
The penalties charged are not to punish tenants for early cancellation but rather to protect the landlord. Both parties should stick to the guidelines of good rental practice to avoid situations becoming difficult and tense, especially in the case of an early cancellation.
Tenants should, if cancellation is unavoidable, notify the landlord in writing, giving enough time from the handing in of the notice to the date of vacation of the property. The landlord should be able to find a new tenant within a month of the existing tenant’s notice, if he acts immediately and advertises the property.
Tenants must remember that the landlord is dependent on the income from the unit rented out and in return, landlords should keep in mind that most tenants have strict budgets. The loss of deposit or a month or two’s rent might be a huge financial blow, and so both parties should be willing to negotiate a fair settlement.