A tenant* may cancel the lease early; but the landlord or Property Practitioner may charge a reasonable penalty.
In determining the reasonable penalty, the landlord or Property Practitioner will take into account in loss of rent; commission paid, or marketing
costs.
The landlord / Property Practitioner would have to indicate to the tenant how the penalty is calculated ie: loss of rent, commission
or advertising costs. (example: the landlord would not be able to charge the tenant for loss of rent if a suitable
replacement tenant was placed with no rent actually lost by the landlord).
*Note the exclusions
:
Leases or renewals entered into prior to 1
st April 2011
Where the tenant is
·
the State
·
a juristic entity whose asset value or annual turnover is greater than R2 million
·
where both the landlord and tenant are juristic entities
* This means that the 20 Business day rule only applies to lease agreements signed after the 1st April 2011 and only where the tenant is a natural person. If the tenant is a juristic person (trust, company or close corporation) then the tenant does not have right to early cancellation of a fixed term agreement.
Consumer Protection Act
Section 14:
Expiry and renewal of fixed term agreements
(2)
(b)
(i) the consumer may cancel that agreement-
(bb) at any other time, by giving the supplier 20 business days’
notice in writing or other recorded manner and form, subject to subsection 3 (a) and (b);
(3) Upon cancellation of a consumer agreement as contemplated in subsection (2)(b)-
(a) a consumer remains liable to the supplier for any amounts owed to the supplier in terms
of that agreement up until the date of cancellation; and
(b) the supplier-
(i) may impose a reasonable cancellation penalty…
(4) The Minister may, by notice in the Gazette, prescribe-
(c) the manner, form and basis for determining the reasonableness of credit and charges contemplated
in subsection (3)
Regulation
Section 5: Maximum duration for fixed-term consumer agreements
(2) For the purpose of section 14 (3), a reasonable credit or charge as contemplated in section 14 (4) (c) may not
exceed a reasonable amount, taking into account-
(a) the amount which the consumer is still liable for to the supplier up to the date of cancellation;
(b) the value of the transaction up to cancellation;
(c) the value of the goods which will remain in the possession of the consumer after cancellation;
(d) the value of the goods that are returned to the supplier;
(e) the duration of the consumer agreement as initially agreed;
(f) losses suffered or benefits accrued by the consumer as a result of the consumer entering
into the consumer agreement;
(g) the nature of the goods or services that were reserved or booked
(h) the length of notice of cancellation provided by the consumer;
(i) the reasonable potential for the service provider, acting diligently, to find an alternative
consumer between the time of receiving the cancellation notice and the time of the cancelled reservation; &
(j) the general practice of the relevant industry
(3) Notwithstanding sub regulation (2) above, the supplier may not charge a charge which would have the effect of
negating the consumer’s right to cancel a fixed term consumer agreement as afforded to the consumer by the Act
Please see TPN's
video on the Consumer Protection Act for more information.