Many tenants will now be looking to downgrade to more affordable premises and will need to cancel their leases. If you are unable to keep up with your monthly rental, then the sooner you take action to move to more affordable rental the better.
You will need to take care though to ensure that you cancel your lease properly and downgrade safely without incurring further costs. Here is how, says Seeff:
Cancelling your existing lease agreement
You can cancel your existing lease in terms of the Consumer Protection Act (the CPA), section 14, by giving twenty business days’ notice, but ensure this is done in writing.
You will be responsible for your rent until your notice period ends. If you are in arrears, make payment arrangements or negotiate a compromise with your landlord as you will need a good credit record if you want to apply for a new rental property.
The landlord can charge a reasonable cancellation fee which will take into account the time that it will take to get a new tenant and the costs of securing the new tenant. Most contracts now stipulate a reasonable penalty. Seeff contracts for example include a maximum of two months’ rental.
At the end of the notice period, your deposit together with interest must be refunded to you within 14 days in terms of the Rental Housing Act. The landlord can, however, deduct outstanding rent, a reasonable penalty, and the cost of damage repairs.
To avoid damage repair costs, ensure that the property is in the same condition as it was when you took occupation. Make sure you attend the exit inspection with the agent and/or landlord to agree on damage and the cost of repairs (if any) and to return the keys. If you do not attend, you could be vulnerable in terms of what the landlord could deduct for damages.
Important points about your new lease
Before you take occupation, ensure that you enter into a professionally drawn up lease agreement which protects your interest as well as that of the landlord. Ensure there is upfront stipulation of what the reasonable penalty would be should you need to terminate it early.
You will need a deposit equivalent to one to two month’s rent as well as the first month’s rent to pay upfront. There will also be an admin or contract fee that you will need to pay upfront as well.
Make sure there is an incoming inspection with the agent and/or landlord. All defects and damages should be stipulated in an addendum to the lease agreement. This will be vital when it comes to getting your deposit refunded.
Remember to maintain a good credit record by paying your rent on time. By looking after the property and keeping it neat and maintained and raising maintenance issues with the landlord, you can ensure you can get as much of your deposit back at the end of the lease agreement.