Ending tenancy agreement

adg1

This is a badly worded break clause pure and simple. Any clause of this kind is mutual by way that EITHER party can offer notice to vacate the property with the listed notice period.

A break clause is there to allow a landlord to break the tenancy for whatever reason and also the tenant - Imagine if a tenant got a new job in the outer hebrides and had to move there as the commute was so bad. With this clause the landlord could simply refuse to allow them to break the contract at the designated point.

Now imagine if the landlord needed to move back into their property - and the tenant refuses to allow the landlord to break it - its the same situation from a different perspective as one party needs to bea able to serve notice to the other.

If its by MUTUAL consent as your agent believes, then there may as well not be a break clause at all - a gentlemans agreement would suffice as both sides have to agree to break the contract and everyone would be happy anyway so its a waste of ink.

Ask the lettings agent to produce a completely different rental contract for another property that includes a NON MUTUAL break clause in it- ie. a proper one that will serve its purpose and you'll probably find this is the only one they use which means that there must be a way of invoking it without the other parties agreement.

Also, imagine if the tenant was living in the property and completely trashed it - the landlord would want to break to contract and make them move out - if they refused then (if you believe your lettings agent) you wouldn't have a hope!!!

Good luck and let me know how it goes.

franklee

fp_1974 wrote: »

Thanks for your help, agreed it does seem rather badly drafted and open to various interpretations. I have spoken to the letting agent and they are the ones who told me that it had to be by mutual consent. However, when asked what happens if we agree it and then the tenant changes their mind, does it all become null and void, they replied with a "don't know", which didn't really instill confidence in me that they knew what they were talking about!!!

Letting agents are often not that good at the legal details IMO especially if talking to office drones. Did you talk to someone senior?

fp_1974 wrote: »

I do feel bad about asking the tenant to leave early, I've had no problems with them. However, I'm tied to a two month notice period on the property I'm currently renting, so giving them the flexibility to leave "whenever is good for them" will put me significantly out of pocket, whilst I maintain payments on two places. I'll speak to the tenant about mutually ending the contract early, otherwise it's looking like I may just have to let it run till the end of August.

Just to be clear, a tenant doesn't have to move out when the section 21 notice period is up (indeed it's often the case that landlords serve a S21 notice when they do not want the tenant to leave thus training tenants to ignore the S21, bad practise IMO).

Anyway the point for your case is that the tenant may not move even at the end of the fixed term even when served a Section 21 notice that requires possession then. Not that I'd expect this to be a problem in your case as you have good tenants, but I thought it worth a mention just in case the tenants cannot find somewhere new to match the correct date and thus would have to shoulder payments on two places which *they* may not be prepared to do. This is why I think you should offer to be at least a bit flexible on the dates as you want the tenant to go so you can move back in.

franklee

adg1 wrote: »

Ask the lettings agent to produce a completely different rental contract for another property that includes a NON MUTUAL break clause in it- ie. a proper one that will serve its purpose and you'll probably find this is the only one they use which means that there must be a way of invoking it without the other parties agreement.

Or it could mean that the contract has been tweaked over time by someone who does not know what they are doing. This forum is littered with examples of badly worded break clauses from agents standard contracts!

N79

OP - Sorry but the break clause in your contract is terrible. Franklee has already covered the fact that the Ts do not have to leave at the end of the notice period - only when a court evicts them.

I just thought I would post my two pennies worth. I have never understood the point of break clauses and have never used them. If you want a 6 month contract then use a 6 month contract - if 12 a 12 month. I have never really seen the advantages (if any) of a 12 month contract with a break vs 6 month contract and then periodic or another 6 month contract and the break point brings the huge disadvantage of complexity.

I would welcome peoples opinions on why they use break points and what they fell the advantages are?

adg1

Advantages are the flexibility it provides, the lack of renewal fees if it is through an estate agent, knowledge that you are in a property for a long time though can leave if your situation changes. If you're a good tenant paying the going rent then the landlord will not want to chuck you out especially in this climate.

So, you can have a 5 year contract with a 6 month break clause in it, safe in the knowledge that the rent won't change year on year (or even 6 monthly), with market trends, and safe in the knowledge that, if you are a good tenant then you are pretty safe in the property and can settle down.

From a landlords perspective they are slightly unattractive as they can result in a tenant leaving a property when the landlord doesn't want them too and leaving the LL having to face agency fees etc again.

adg1

franklee wrote: »

Or it could mean that the contract has been tweaked over time by someone who does not know what they are doing. This forum is littered with examples of badly worded break clauses from agents standard contracts!

Indeed it could. Though they probably generate a contract straight off their computer system so should be automatic really.

Its just a badly worded clause that actually has no real value to the contract because of its wording.

N79

Advantages are the flexibility it provides,

What extra flexibility or rights do you gain over two 6 month tenancies? I may be being a little thick but I have never understood what this flexibility is.

the lack of renewal fees if it is through an estate agent,

Fair point as I have been horrified at the rediculous charges some agents are reported as charging on here.

knowledge that you are in a property for a long time though can leave if your situation changes.

How is this true though because if there is a break clause the the LL could use it as well?

If you're a good tenant paying the going rent then the landlord will not want to chuck you out especially in this climate.

Agree but the same would apply to two 6 month tenancies, or indeed a 6 month followed by a periodic tenancy.

So, you can have a 5 year contract with a 6 month break clause in it, safe in the knowledge that the rent won't change year on year (or even 6 monthly), with market trends, and safe in the knowledge that, if you are a good tenant then you are pretty safe in the property and can settle down.

An LL who offers a 5 year contract without a mechanism to raise the rent is mad! I agree thought that in this instance it would mean LL and T would know what the rental increases are going to be (related to inflation or whatever the benchmark is). Of course this also has the disadvantage of locking a T into rent rises at a time like now where rents may actually be decreasing.

From a landlords perspective they are slightly unattractive as they can result in a tenant leaving a property when the landlord doesn't want them too and leaving the LL having to face agency fees etc again.

caljoemor

adg1 wrote: »

So, you can have a 5 year contract with a 6 month break clause in it, safe in the knowledge that the rent won't change year on year (or even 6 monthly), with market trends, and safe in the knowledge that, if you are a good tenant then you are pretty safe in the property and can settle down.

It wouldn't be an AST if it's 5 years any over 3 has to be a deed so I believe.

OP - I think your best bet is to speak to the tenant and try to come to an agreement, as previously posted any notice you serve does not mean that the tenant has to leave you may still need to get a Possession Order.

Re the break clause my understanding is that you would be entitled to serve the notice after 6 months but that it still has to expire at the end of the fixed term, it is a daft break clause either way.

You could serve a Section 8 notice providing 2 months notice and prooving grounds under Schedule 2 of the housing act I think your ground would be the one referring to it being your only or main home, however the tenant does not have to leave at the end of the 2 months again you may need a Possession Order. You would also have to check that there is a reference to the possiblility of you serving this notice in the original agreement as it is one of the conditions.

If the tenant knows they are unlikely to get an extension and will need to find a new place in August you may find that they start looking now. If they find something could want to leave before August, so I still think speaking to them would be the best way to move forward.

Good luck!

N79

caljoemor wrote: »

It wouldn't be an AST if it's 5 years any over 3 has to be a deed so I believe.

It would still be an AST. You are right that it would need to be executed in the form of a deed.

adg1

N79 wrote: »

What extra flexibility or rights do you gain over two 6 month tenancies? I may be being a little thick but I have never understood what this flexibility is.

You don't have to pay agency fees twice a year. Last calculations that was anything between £150 to £400 a time! So, costs, security, credit rating increases. Breakclauses are best from the tenants point of view.

How is this true though because if there is a break clause the the LL could use it as well?

Indeed they could, though not many landlords will ask a good tenant to move in a market like this - there's a lot of risk involved from their side, also costs. It is a risk with renting all us tenants face. No landlord of mine has ever invoked a breakclause in about 7 years solid renting - its been me who has used it.

Agree but the same would apply to two 6 month tenancies, or indeed a 6 month followed by a periodic tenancy.

Again agency fees here is the key. You don't have to continually pay them. Also, moving costs money - 6 week deposit, months rent, agency fees each time and there is always a lag between getting a deposit back and putting a new one down on the new house. Also, if the EA remarkets the property to find a new tenant. Not all landlords want a periodic as it offers very little security for them (1 months notice remember).

An LL who offers a 5 year contract without a mechanism to raise the rent is mad! I agree thought that in this instance it would mean LL and T would know what the rental increases are going to be (related to inflation or whatever the benchmark is).

There is a clause in most contracts about rental increases in line with inflation or the retail price index - about a 5-6% increase year on year, rather than messing about with an agent or the landlord wanting as much more rent as they can get.

Of course this also has the disadvantage of locking a T into rent rises at a time like now where rents may actually be decreasing.
Indeed, but rents are increasing slowly as more and more people are forced to rent as you need such a huge whack as a buyer for a mortgage.

Rents are driven by demand - in the summer a garden flat is worth more than in the winter as a garden in seen as a benefit more as the sun shines. There is huge demand for rental property (around London - I assume its similar everywhere) hence prices are pretty good (from a landlords perspective though I suppose not so much a tenants!).

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