How does the landlord calculate a “reasonable” penalty for early cancellation of the lease agreement?
Regulation 5 issued in terms of the Act requires the landlord to take the following into account when calculating a reasonable penalty:
- the amount which the consumer is still liable for to the supplier up to the date of cancellation;
- the value of the transaction up to cancellation;
- the value of the goods which will remain in the possession of the consumer after cancellation;
- the value of the goods that are returned to the supplier;
- the duration of the consumer agreement as initially agreed;
- losses suffered or benefits accrued by consumer as a result of the consumer entering into the consumer agreement;
- the nature of the goods or services that were reserved or booked;
- the length of notice of cancellation provided by the consumer;
- the reasonable potential for the service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the time of the cancelled reservation; and
- the general practice of the relevant industry.
Notwithstanding the above, the landlord may not charge a charge which would have the effect of negating the consumer’s right to cancel a fixed term consumer agreement as afforded to the consumer by the Act.