Tenants fined $2600 for breaking fixed-term lease: buying first home no excuse

Tenants lose tribunal case after ending fixed-term tenancy early. Photo / file

Two Auckland tenants, who sought to break an annual fixed-term tenancy agreement within just two months of signing, were fined more than $2600 after buying a house and trying to escape their obligations.

Last June, Gourav Ahuja and Isha Isha rented a Mt Wellington property managed by Barfoot & Thompson, signing a fixed-term agreement through to July, 2020.

But two months later, on August 29, they told the agency they were buying their first home and wanted to escape their lease, claiming an unforeseen change in circumstances.

"They therefore urgently wanted to end the fixed term tenancy so they could move to their new home and pay just their mortgage and avoid paying rent," the tribunal noted.

"There was clearly a change in the tenants' circumstances: they had contracted to buy a house and it was possible that decision threatened severe financial hardship for them given they were also contracted to pay the rent."

But the change was entirely foreseeable and avoidable and they bought their first house knowing they were bound to rent the premises until July this year, the tribunal said.

"It was the tenants themselves who changed their circumstances," it said.

Ahuja and Isha made an application to the tribunal, saying they were inadequately informed. They knew they would have to pay a break fee but not that they would be liable for any deficit in rent the landlord suffered in trying to find new tenants.

The two said they agreed to pay $700 plus GST for the break fee.

The tribunal noted how last September, the agency began marketing the new premises to new tenants.

But Ahuja and Isha were "scathing" about early efforts to find new tenants, levelling accusations of "unprofessional and ignorant behaviour" at the managers.

Advertising only mentioned one carpark when there were three, interior pictures were incorrect, potential tenants were brought in for viewing without proper notice, no set viewing times were advertised and there was a lack of communication, the two claimed.

But the property manager said the place was advertised on a number of platforms, effective ways to arrange viewings were made and the photographs were unlikely to deter a genuine prospective tenant.

The tribunal found that the managers had made reasonable attempts to find new tenants in a timely way.

The tenants were ordered to pay $2657 in rent due till October 30 last year when it was declared the tenancy ended. The tenants' bond of $2400 should also be paid to the agency, the tribunal ordered.

The landlord was ordered to pay the tenants $257 in compensation for not being given proper notice for entry on several occasions.

A spokesperson for the agency said: "We property managers, we always look to make these situations as financially amicable as possible for both parties. That said, the owners shouldn't have to forgo rental income when a tenant decides to move on from a fixed-term contract. The tribunal ruled correctly and fairly."