What to do when a tenant wants to break their lease early

It happens more often than you'd think

You've signed a 12-month fixed-term tenancy agreement, and three months in, your tenant tells you they need to leave. Maybe they've got a job transfer, a relationship breakdown, or a family situation that's changed their plans.

It's a frustrating position to be in as a landlord. You chose a fixed term for certainty, and now that certainty is gone. But how you handle the situation matters — both legally and practically.

Here's what you need to know.

Fixed-term vs periodic tenancies

The rules around early termination depend entirely on the type of tenancy.

Fixed-term tenancies

A fixed-term tenancy has a defined start and end date. Neither party can end it early by simply giving notice. The agreement is binding for the full term unless:

• Both parties agree in writing to end it early
• The Tenancy Tribunal makes an order to terminate
• There is a break clause in the agreement (uncommon in NZ residential tenancies)

This means your tenant cannot just give you four weeks' notice and walk away. They are legally committed to paying rent until the end of the fixed term — or until one of the above exceptions applies.

Periodic tenancies

A periodic tenancy rolls on week to week or fortnight to fortnight. Tenants can end a periodic tenancy by giving 28 days' written notice at any time. There is no concept of "breaking the lease" with a periodic tenancy because there is no fixed end date.

Your options when a tenant wants to leave early

When a tenant on a fixed-term agreement asks to leave before the end date, you have several options. The right approach depends on the circumstances.

Option 1 — Mutual agreement to end the tenancy

This is the most common and usually the best outcome. You and the tenant agree in writing to end the tenancy early, including any conditions — such as the tenant paying rent until a new tenant is found, covering re-letting costs, or forfeiting part of the bond.

Key points:

• The agreement should be in writing and signed by both parties
• It should specify the date the tenancy ends
• It should clearly state any financial obligations (rent owed, re-letting costs, etc.)
• It does not need to go through the Tribunal

Most tenants who ask to leave early are cooperative and willing to help find a replacement. A mutual agreement keeps things simple and avoids Tribunal costs and delays.

Option 2 — Tenant continues to pay rent

If you can't reach a mutual agreement, the tenant remains legally obligated to pay rent until the end of the fixed term. You don't have to agree to let them go.

However, this approach has risks:

• The tenant may stop paying rent, forcing you to pursue arrears through the Tribunal
• The relationship may deteriorate, making future dealings difficult
• If the tenant abandons the property, you still need to follow the correct process before re-letting

In practice, insisting that a tenant stay when they clearly want to leave often creates more problems than it solves.

Option 3 — Tenancy Tribunal application

Either party can apply to the Tenancy Tribunal to end a fixed-term tenancy early. The Tribunal will consider whether it is just and equitable to do so, taking into account:

• The reasons for the request
• How much of the fixed term remains
• Whether the landlord will suffer financial loss
• Whether a replacement tenant can be found
• The conduct of both parties

The Tribunal can make orders about compensation, including requiring the tenant to cover the landlord's reasonable costs of re-letting.

Understanding re-letting costs

When a tenant breaks a fixed-term lease, the landlord is generally entitled to recover reasonable costs associated with finding a new tenant. These are called re-letting costs (sometimes referred to as break fees, though that term isn't used in NZ legislation).

What can you claim?

• Advertising costs — the cost of listing the property on Trade Me, social media, or other platforms
• Lost rent — rent for the period the property sits vacant between tenants (but you must make reasonable efforts to minimise this)
• Letting fees — if you use a property manager to find the new tenant, their letting fee is a legitimate cost
• Administration costs — reasonable time spent arranging viewings, processing applications, and preparing the new tenancy agreement

What can't you claim?

• Rent for the entire remaining term if you could have re-let the property sooner — landlords have a duty to mitigate loss
• Costs that you would have incurred regardless (e.g., maintenance that was already needed)
• Punitive charges that aren't linked to actual costs

The duty to mitigate

This is a critical principle. Even if your tenant breaks the lease, you have a legal obligation to take reasonable steps to minimise your financial loss. This means advertising the property promptly, conducting viewings, and accepting a suitable replacement tenant without unreasonable delay.

If you deliberately leave the property empty to accumulate rent arrears, the Tribunal is unlikely to award you the full amount.

Practical steps when you receive the request

Here's a sensible process to follow when your tenant says they want to leave early:

1. Don't react emotionally. It's frustrating, but approaching the situation calmly will produce a better outcome.
2. Ask for the request in writing. Even if the conversation starts verbally, get the tenant to put their request in an email or letter, including their proposed exit date and reasons.
3. Review your tenancy agreement. Check the fixed-term end date and whether the agreement contains any relevant clauses about early termination.
4. Assess the situation. Is the rental market strong in your area? How quickly are similar properties being let? If you can find a new tenant within a week or two, the financial impact may be minimal.
5. Negotiate a mutual agreement. In most cases, the best outcome is an agreement where the tenant pays rent until a new tenant moves in, plus any reasonable advertising or letting costs. Put this in writing.
6. Start advertising immediately. Whether or not you've reached an agreement, begin advertising the property as soon as you know the tenant is leaving. This demonstrates you're mitigating your loss.
7. Document everything. Keep records of all communications, advertising, viewings, and costs incurred.

What about the bond?

The bond is not automatically forfeited because a tenant breaks the lease. It remains subject to the normal bond refund process.

You can claim against the bond for:

• Unpaid rent
• Damage beyond fair wear and tear
• Reasonable re-letting costs (if agreed or ordered by the Tribunal)

If the tenant disputes your claim, the Tribunal will decide.

When a tenant just leaves

Sometimes a tenant doesn't ask — they just leave. If a tenant abandons a fixed-term tenancy, you should:

1. Attempt to contact them in writing
2. Inspect the property
3. Apply to the Tribunal for an order to terminate the tenancy and recover costs
4. Begin re-advertising the property

Do not simply change the locks and move on. There is a formal process for dealing with abandoned property and belongings that you must follow.

Making the best of a difficult situation

Early lease terminations are an inevitable part of being a landlord. The tenants most likely to break a lease are often the ones facing genuine hardship — job loss, illness, family emergencies. Responding with empathy and pragmatism usually leads to a better outcome for everyone.

Tools like keel can help you manage the documentation and timelines involved in re-letting, but the most important thing is to stay calm, know your rights, and focus on finding a good replacement tenant quickly. Most of the time, a cooperative approach gets you back to normal within a few weeks.