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tenancy

"Hardship" terminations: Ending a lease early through the Tribunal

Key Takeaway

In New Zealand, a residential tenancy agreement can be terminated early due to serious hardship for either the tenant or landlord. The Tenancy Tribunal assesses applications by considering the hardship's nature, steps taken to reduce it, and impact on the other party. If approved, the Tribunal may impose conditions, such as compensation.

Ending a Residential Tenancy Early Due to Hardship

In New Zealand, a residential tenancy agreement, which is a contract between a landlord and a tenant for the rental of a property [Source: Residential Tenancies Act 1986, s 2(1)], is typically for a fixed term or a periodic term. While parties are generally bound by the agreed term, the law provides a mechanism for early termination in cases of serious hardship through an application to the Tenancy Tribunal, an independent judicial body that resolves disputes between landlords and tenants [Source: Residential Tenancies Act 1986, s 67].

Applying for Hardship Termination

Either a landlord or a tenant may apply to the Tenancy Tribunal for an order to terminate a tenancy if they are experiencing serious hardship [Source: Residential Tenancies Act 1986, s 66(1)]. The Tribunal has the authority to make such an order if it is satisfied that one of the parties has suffered serious hardship and that it would be reasonable to terminate the tenancy under the circumstances [Source: Residential Tenancies Act 1986, s 66(2)].

What Constitutes Serious Hardship?

The Residential Tenancies Act 1986 does not explicitly define “serious hardship.” Instead, the Tenancy Tribunal assesses each case based on its specific facts. When considering an application for hardship termination, the Tribunal must take into account several factors [Source: Residential Tenancies Act 1986, s 66(3)]:

  • The circumstances in which the hardship arises: This involves examining the nature and cause of the hardship, such as unforeseen changes in employment, health, or family circumstances. The hardship must be significant and not merely an inconvenience.
  • The extent to which the applicant has taken steps to mitigate the hardship: The Tribunal will consider whether the party seeking termination has made reasonable efforts to reduce or alleviate the hardship by other means, for example, by trying to find a replacement tenant (if the tenancy agreement permits assigning or subletting with landlord's consent, which cannot be unreasonably withheld [Source: Residential Tenancies Act 1986, s 42(2)]), or by seeking other solutions.
  • The likely effect of the termination on the other party: The Tribunal will assess the impact that an early termination would have on the non-applying party, including any financial loss, inconvenience, or difficulty in finding new accommodation or a new tenant.
  • Any other matters it considers relevant: This allows the Tribunal flexibility to consider all pertinent details of the situation.

Tribunal's Decision and Conditions

If the Tenancy Tribunal decides to grant an order for early termination due to hardship, it may impose various conditions as it sees fit [Source: Residential Tenancies Act 1986, s 66(4)]. These conditions are intended to ensure fairness and may include, but are not limited to:

  • Payment of compensation: The Tribunal may require the party who applied for the termination to pay compensation to the other party. This compensation is often to cover financial losses incurred due to the early termination, such as lost rent, re-letting fees, or advertising costs [Source: Residential Tenancies Act 1986, s 66(4)(a)].
  • Payment of costs: The Tribunal may also order the applicant to pay all or part of the costs incurred by the other party as a direct result of the early termination [Source: Residential Tenancies Act 1986, s 66(4)(b)].

It is important to understand that hardship termination is not automatically granted and requires a compelling case demonstrating serious and unforeseen circumstances that make it unreasonable for the tenancy to continue.

When to Seek Independent Legal Advice

Individuals considering applying to the Tenancy Tribunal for a hardship termination, or those responding to such an application, are strongly encouraged to seek independent legal advice. This includes contacting Tenancy Services for information and guidance, or consulting with a lawyer. Free legal assistance is available through Community Law Centres across New Zealand, which can provide general information and support for navigating complex tenancy issues.

Key Resources