Consumer Information

Author : Shaun Luyt

What’s the value of a fixed term lease if a tenant can cancel on 20 business days notice at any time?

I’ve often been asked, by both landlords and agents, “Is there any purpose in signing a fixed term lease when a tenant can cancel the lease at any time by simply giving 20 business days notice?”

It does sound a bit contradictory when you need to explain this to landlords.

“Mr &/or Mrs Landlord, although we’re signing a 12 month lease, you need to understand that the tenant may cancel the lease at any time by giving 20 business days notice under the Consumer Protection Act.”

“And,” you carry on, “you may not refuse to accept such notice, and the tenant is not obliged to provide any reasons for cancellation.”

By this time you often have some perplexed faces. This is usually when the question then comes. “What’s the purpose of signing a fixed term lease then?”

How do you answer that?

“Well,’ I usually answer, “there is protection built into the Act for you. If the tenant terminates then you should be entitled to a cancellation penalty which should cover any lost rent. There are some things we need to do to protect this entitlement, but we’re experienced in these matters and we’ll advise you exactly how to protect your interests if we face this situation.”

“So, yes, there’s a definite benefit to entering into a fixed term lease with a tenant.”

Consumer Protection Act (CPA),
CPA Reasonable Cancellation Penalty
Fixed Term Lease Agreements
Lease Agreements
Rental forms

I hope and trust you found this information useful.
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Contact:  Shaun Luyt