There are a few options when tenants want to end their fixed-term tenancy early and their landlord agrees to replacing tenants. However, in many cases, the departing tenant will need to continue to pay rent until new tenants are found.
If only some but not all tenants want to leave, the most straightforward way to do this is by directly replacing the departing tenant(s).
If all tenants want to leave, the easiest solution is for the tenants to ask the landlord to agree to them ending the tenancy early. If this isn’t possible, the tenants can ask the landlord to agree to them assigning or subletting the tenancy. Assignment is preferable. Subletting, where the tenant on-rents the property to another person, has significant risks for the original tenant because they remain responsible for the tenancy.
All options require a variation to the tenancy agreement. The variation must be signed by both the landlord and all tenants and state what date it will take effect. The landlord must update the change of tenant in the Bond Hub.
The landlord can include conditions for the variation and can charge the tenant reasonable costs, such as administration or tenant vetting fees, related to processing the requested change. These charges can only be the actual costs incurred and the landlord must provide the tenant/s with a breakdown of the expenses and relevant invoices.
To end a periodic tenancy, the best option is for the tenant to simply give the required 21 days’ notice rather than assigning or subletting the tenancy. Be aware that if there are multiple tenants named on the tenancy agreement, and any one of them gives notice, this ends the periodic tenancy for all the tenants.
If not all tenant want to leave
In a fixed-term tenancy, if some tenants want to leave and some tenants want to stay on, the most straightforward way to do this is by directly replacing the departing tenant(s). To do this:
- the departing tenants must get permission from both the landlord and the remaining tenants
- everyone must sign a variation to the tenancy agreement
- the landlord must update Bond Hub with the change of tenant details.
It is important that everyone has a clear understanding of who is responsible for finding the replacement tenant and for agreeing on whether the replacement tenant is acceptable.
For example, the departing tenant could take responsibility for finding someone else, but with the other tenants having the right to make the final decision about whether the replacement person can move in.
Or, the departing tenant might move out and continue paying rent while the other tenants take responsibility for finding a replacement. In these situations, it is good to clarify what steps will be taken to actively look for a replacement tenant and how long is ‘reasonable’ for a new tenant to be found.
In both cases, the landlord will likely also want to check and approve a new person before they are added to the tenancy.
If agreement can't be reached
Replacing a tenant can be a difficult situation to navigate if there are disagreements, and the departing tenant can sometimes end up paying rent for a long time after they have moved out if the responsibilities and decision-making processes are not clear.
If the tenants are not able to reach agreement between themselves, for instance, regarding how long the departing tenant must keep paying rent, they can go to the Disputes Tribunal. Disputes between tenants are considered to be flatmate disputes and are not dealt with by the Tenancy Tribunal.
If the landlord is not willing to agree to a replacement tenant, the departing tenant(s) will need to keep paying rent until the end of the fixed-term contract or see if they can be released from the fixed-term agreement by taking the matter to the Tenancy Tribunal. However, there are very limited grounds for leaving a fixed-term tenancy early.
Refund of the tenant’s share of the bond
If the departing tenant has contributed to the bond, arrangements for the refund of their share of the bond should be agreed between all tenants and the landlord before that tenant leaves.
This can happen in two ways:
- the new tenant can pay the departing tenant their share of the bond directly, or
- the departing tenant can request a bond refund of their share of the bond from Tenancy Services, and the new tenant then makes a new bond payment to Tenancy Services (normally via the landlord).
The landlord must update the bond details in the Bond Hub.
Find out more about bond refunds
Assignment of tenancy
Assignment is when tenants end their tenancy by transferring their tenancy to another tenant or tenants. It requires a variation to the tenancy agreement in which their name is removed and replaced with the new tenant's name and this is updated in Bond Hub.
When a tenant assigns their tenancy to a new tenant, the new tenant takes over the tenancy with the same conditions as previously, including the same rent and same end date for the fixed term.
On the date the that new tenant takes over, the original tenant is no longer responsible for the tenancy. They will still need to pay any money they owe to the landlord from before that date, eg, rent arrears.
Tenancy Services provide this template letter that tenants can use to request an assignment of their tenancy.
The tenant should arrange for their bond to be refunded as for the normal end of a tenancy.
Landlords cannot unreasonably withhold consent
The tenant has the right to assign their tenancy provided that they have their landlord's written consent and follow any conditions that the landlord sets (s43B(1) RTA). The landlord cannot unreasonably withhold their consent for assignment or attach unreasonable conditions (s 43B(6) RTA).
A tenancy agreement cannot prohibit assignment, unless it is a social housing tenancy or the tenancy was started before 11 February 2021 (s 43A RTA).
There are only a limited range of issues that the landlord should consider when deciding whether to withhold consent. These could include:
- whether there is a reasonable basis for the tenant’s request
- the impact on the landlord (eg, lost revenue, time, etc)
- whether there are any problems with the new tenant (eg, poor credit or bad references).
The tenant can mitigate the likelihood of a landlord withholding consent by addressing these issues when making the request to assign the tenancy. This might include providing references for the new tenant and offering to pay reasonable expenses.
If the landlord withholds consent, or takes too long to respond to the request of the tenant, this is an unlawful act and the tenant can apply to the Tenancy Tribunal to have the issue resolved.
Quick tip
In the case of a fixed-term tenancy where the landlord withholds consent for assignment and the tenant considers this is unreasonable, the tenant might want to suggest ending the fixed-term tenancy early by agreement as an alternative, before taking the matter to the Tenancy Tribunal.
Subletting of tenancy
Subletting is usually where a tenant moves out of the house they are renting and then rents the house to someone else (‘on-rents’). It has significant risks for the original tenant because they remain responsible for the tenancy.
Whether a tenant is allowed to sublet the property depends on what their tenancy agreement says. Tenancy agreements are allowed to prohibit the tenant from subletting the premises (s 44(1) RTA).
If subletting is not prohibited, the tenant can sublet the property but they must get the prior written permission of the landlord (s 44(2) RTA). The tenant must obey any conditions that the landlord sets. The landlord cannot withhold consent unreasonably, or attach any unreasonable conditions to their consent (s 44(3) RTA).
It is an unlawful act if the tenant sublets all or part of the rented property without written permission from the landlord or if the tenancy agreement prohibits it (s 44(2A) RTA).
What subletting means for the tenant
When a tenant sublets a property they remain responsible to the landlord until the end of their fixed term. They must ensure that the rent is paid on time and the place is kept clean and tidy and not damaged. If the subletting tenant doesn’t pay their rent or causes damage, it is the original tenant who will be pursued for payment.
The original tenant becomes the sublandlord of the person who moves into the house (the subtenant) and has landlord responsibilities towards them. This includes needing to sign a separate tenancy agreement with the subtenant (unless the sublet is for holiday accommodation - see below).
Thus, when subletting, the original tenant takes on:
- all the legal rights and responsibilities of a tenant as set out by their tenancy agreement with their landlord, and
- all the legal rights and responsibilities of a landlord as set out by the new tenancy agreement with the subtenant.
The responsibility of the original tenant towards both the landlord and the subtenant ends at the end date of the original fixed term.
What happens at the end of a fixed-term subtenancy
The landlord can end both the original tenancy and subtenancy at the end of the fixed term by giving all involved the appropriate notice.
Alternatively, the landlord and subtenant can choose to not end the subtenancy. The tenancy will continue directly with the landlord and the landlord takes over the original tenant’s sublandlord responsibilities (s 57 RTA).
Subletting property for holiday accommodation or other uses
If tenants rent out any part of their rental property, even just for holiday accommodation, this may be considered subletting. The exception to this is when a tenant shares the rental property with a flatmate.
Tenants must speak to their landlord and get permission before renting out any part of the rental property for anything other than a place to live. As well as being a potential breach of the tenancy agreement if the tenant does not have the landlord's consent, renting out all or part of the property for business purposes or for temporary holiday accommodation may cause insurance problems for both landlords and tenants.
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