A couple of worries with our Tenancy Agreement

gcdh

Hello,

I would really appreciate some help about a contract I am set to sign with my flatmate, for a property in London. Apologies in advance for being so naive about things, but I'd rather be safe than sorry! There are a couple of points which we aren't sure are standard to include or not, and we're really worried that they put us in quite a vulnerable position. This isn't helped by the fact that our estate agent has been very unhelpful/unapproachable.

Firstly, the contract mentions that 1) the landlord is the owner occupier of the flat, and that 2) it is subject to a mortage, with the mortgagee entitled to exercise a power of sale, requires possession of the flat for the purpose of disposing of it with vacant possession and exervise of that power. Why is this mentioned - are these standard clauses?

Also, we negotiated a break clause at eight months, requiring two month's notice. However, the contract mentions that the notice period cannot commence any time before the specific date which is eight months passes (Feb 2012), which presumably means we couldn't give notice at six months to move out exactly eight months after? With this in mind, there is nothing mentioned from the landlord's side of things, i.e. what's to stop him from evicting us before the eight month period?

Finally, our landlord's official contract address registers to some sort of auction house. There's very little information about them online, apart from on Companies House where they are listed as buying, selling and managing/letting property. According to our estate agents, the landlord (actually, there's two of them) owns a number of properties and are very reliable, but we fear that they are going to kick us out in order to sell the property. The contract is technically for 24 months - is it the 'done' thing to get some minimum requirement from them in a contract about them not kicking us out for a certain period as reassurance, or is this power out of our hands?

Thanks for any help with this...

tbs624

Welcome, as a newbie to MSE:)

The clauses to which you refer relate directly to Schedule 2 of the Housing Act 1988 ( which covers Grounds under which repossession of the property may be sought)

Grounds for Possession of Dwelling-houses let on Assured Tenancies
Part I
Grounds on which Court must order possession

Ground 1
Not later than the beginning of the tenancy the landlord gave notice in writing to the tenant that possession might be recovered on this ground or the court is of the opinion that it is just and equitable to dispense with the requirement of notice and (in either case)—(a)at some time before the beginning of the tenancy, the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them occupied the dwelling-house as his only or principal home; or(b)the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them requires the dwelling-house as [F1his, his spouse’s or his civil partner's] only or principal home and neither the landlord (or, in the case of joint landlords, any one of them) nor any other person who, as landlord, derived title under the landlord who gave the notice mentioned above acquired the reversion on the tenancy for money or money’s worth.

Ground 2
The dwelling-house is subject to a mortgage granted before the beginning of the tenancy and—(a)the mortgagee is entitled to exercise a power of sale conferred on him by the mortgage or by section 101 of the M1Law of Property Act 1925; and(b)the mortgagee requires possession of the dwelling-house for the purpose of disposing of it with vacant possession in exercise of that power; and(c)either notice was given as mentioned in Ground 1 above or the court is satisfied that it is just and equitable to dispense with the requirement of notice;and for the purposes of this ground “mortgage” includes a charge and “mortgagee” shall be construed accordingly.

The LL can't use Ground 1 within the Fixed Term ( and the Notice should not be included within the actual tenancy agreement, but served separately.) The LL can obviously invoke that break clause, as can you as the T.

Many Lenders will insist on the inclusion of Ground 2 within the tenancy agreement in case the LL falls into mortgage arrears. A Court Order must be sought

You say that you negotiated for the break clause to be at eight months but don't seem happy with the LL's wording of that clause: if you wanted to be able to give a break clause notice at the six months point, to end at eight months, rather than the break clause notice beginning at 8 months then ask them to amend the clause.

If you are unsure about anything that is in your potential tenancy agreement seek out an experienced LL& T lawyer locally, and ask them to go through it:many solciitors will offer a Fixed Fee appt. If you are on a low income try Community Legal Advice and/or Shelter.

may_fair

gcdh wrote: »

Also, we negotiated a break clause at eight months, requiring two month's notice. However, the contract mentions that the notice period cannot commence any time before the specific date which is eight months passes (Feb 2012), which presumably means we couldn't give notice at six months to move out exactly eight months after? With this in mind, there is nothing mentioned from the landlord's side of things, i.e. what's to stop him from evicting us before the eight month period?

Please quote the exact wording of the break clause. Are you sure the contract doesn't mention anything about LL's right to exercise the break clause? It might be in a subsequent clause.

The contract is technically for 24 months - is it the 'done' thing to get some minimum requirement from them in a contract about them not kicking us out for a certain period as reassurance, or is this power out of our hands?

It is normal for LL to grant a fixed term contract. Assuming this is an Assured Shorthold Tenancy, LL cannot evict you via the standard 'no fault' s.21 procedure before expiry of the fixed term (or earlier than six months after the start of the tenancy). However, if the break clause allows LL to serve notice, then his notice would end the fixed term early, allowing him to apply for possession under s.21 Housing Act 1988.

If you are new to letting, and this is a joint contract, be aware that you are individually and jointly liable for all of the rent - not just a 'share'. Therefore, it's essential you're fully confident that your flatmate is reliable etc.

gcdh

Thanks so much to both of you for your replies (you've made a newbie feel very welcome!).

The estate agent has confirmed to us that the landlord does not have a break clause, and that the only way they can serve notice is for breach of agreement. Obviously, my flatmate and I plan to be as good as gold - the only breach from our side would be us wanting to leave after the break clause period and enact our two month's notice that way.

The break clause point covers the following (paraphrased by me):
- the LL agrees that the Tenant has the right to terminate the Tenancy after the first eight calendar months by giving no less than two calendar month's notice.
- To avoid doubt between the parties it is agreed that the notice period cannot commence any earlier than XX February 2012 [this is the date exactly 8 months after the tenancy starts)
- Upon expiry of this notice this Agreement shall cease except that the Landlord and the Tenant can pursue their legal rmeidies against each other for any breach of any preexisting rights under the Agreement apart from the pre-existing right to a fixed term contract which is subject to this clause.

I believe that as part of an Assured Shorthold Tenancy we have statutory protection for 6 months. So, from the landlord's perspective, we can be kicked out with two month's notice any time after this 6 months has elapsed, as long as the reason is covered by one of the grounds in our contract? Is it standard for landlords not to have their own break clause, like the estate agent has confirmed?

Many thanks once again.

may_fair

gcdh wrote: »

The break clause point covers the following (paraphrased by me):
- the LL agrees that the Tenant has the right to terminate the Tenancy after the first eight calendar months by giving no less than two calendar month's notice.
- To avoid doubt between the parties it is agreed that the notice period cannot commence any earlier than XX February 2012 [this is the date exactly 8 months after the tenancy starts)

Then you cannot end the contract earlier than 10 months after the start of the tenancy. It should really specify that the notice must be given in writing, so that it's crystal clear as to how the clause may be exercised.

I believe that as part of an Assured Shorthold Tenancy we have statutory protection for 6 months. So, from the landlord's perspective, we can be kicked out with two month's notice any time after this 6 months has elapsed, as long as the reason is covered by one of the grounds in our contract?

No. The 'six month rule' only applies to proceedings under s.21 Housing Act 1988. The LL cannot gain possession under s.21 earlier than six months after the start of the tenancy or before expiry of the fixed term. However, as LL has no option to exercise the break clause, he couldn't get a possession order to take effect until after the fixed term expires in 24 months.

The 'six month rule' does not apply if LL applies for possession under s.8, using one of more of the grounds in Schedule II Housing Act 1988. Very often, it will be on the ground of unpaid rent, but there are other grounds such as those quoted by tbs624 in post #2. Full list of grounds in this link. The notice period under s.8 notices varies depending on the grounds cited; for example, if LL cites grounds relating to unpaid rent only (grounds 8, 10 & 11), the notice period is 14 days.

Is it standard for landlords not to have their own break clause, like the estate agent has confirmed?

No, not at all standard. Break clauses usually operate both ways.

DVardysShadow

gcdh wrote: »

.... The break clause point covers the following (paraphrased by me):
- the LL agrees that the Tenant has the right to terminate the Tenancy after the first eight calendar months by giving no less than two calendar month's notice.
- To avoid doubt between the parties it is agreed that the notice period cannot commence any earlier than XX February 2012 [this is the date exactly 8 months after the tenancy starts)
- Upon expiry of this notice this Agreement shall cease except that the Landlord and the Tenant can pursue their legal remedies against each other for any breach of any preexisting rights under the Agreement apart from the pre-existing right to a fixed term contract which is subject to this clause.

I believe that as part of an Assured Shorthold Tenancy we have statutory protection for 6 months. So, from the landlord's perspective, we can be kicked out with two month's notice any time after this 6 months has elapsed, as long as the reason is covered by one of the grounds in our contract? Is it standard for landlords not to have their own break clause, like the estate agent has confirmed?

As may_fair says, the assured term is the term in the agreement, rather than 6 months. 6 months is just the statutory minimum assured term.

As for the break clause, you negotiated 8 months and you should insist on 8 months. The highlighted phrase should be amended to read 'the date for which notice is effective shall be no earlier than ...'

tbs624

gcdh wrote: »

Is it standard for landlords not to have their own break clause, like the estate agent has confirmed?

Most contracts which include a break clause are worded in such a way as to make the break available for use by either party.

The main thing though, as both DVS and I have said, is that you ask them to amend the break clause to line up with your original request.

G_M

tbs624 wrote: »

Most contracts which include a break clause are worded in such a way as to make the break available for use by either party.

The main thing though, as both DVS and I have said, is that you ask them to amend the break clause to line up with your original request.

In fact a break clause that could only be operated by one party would be deemed an unfair term, so unenforcible.

The break clause HAS to be open to either side to activate.

Just go back and ask for the break clause to be re-worded as you want it.

tbs624

G_M wrote: »

In fact a break clause that could only be operated by one party would be deemed an unfair term, so unenforcible.

The break clause HAS to be open to either side to activate.

I agree with you G_M, where a break clause in a tenancy agreement provided by a LL is worded in such a way as to be unfair to the T.

In this case however, it seems that the LL has failed to provide equality *for him/herself*. I really don't see that a LL could then claim "this is an unfair term" - they provided the actual tenancy agreement.