Exiting tenancy early. Is this unreasonable?

ViktorOnopko

Well, the good news is that the LL has asked for just 50% of the rent as they wish to do some work to the property. I would therefore hope, with adequate notice, that a new tenant will be found and we can exit with limited expenditure.

ReallyConfused

Hi guys, just jumping in now as I have a similar problem as the OP. However, I would like to point you to the OFT365 guidelines (google search and you'll find the PDF). I'm aware that the OFT is now defunct, but hopefully the guidelines will still hold in court.

Basically, it says that even if you sign a contract, under English law, you are only bound to the core terms. Termination fees that are excessive or unfair (see 3.58 in OFT365), they would consider to be unfair contract terms, and we will not be bound to it. This is the stance I'm currently taking with my LA, and I'm trying to get in touch with LL to negotiate outside of LA's terms. Will let you all know how it develops. What do you guys think of OFT365?

Guest101

ReallyConfused wrote: »

Hi guys, just jumping in now as I have a similar problem as the OP. However, I would like to point you to the OFT365 guidelines (google search and you'll find the PDF). I'm aware that the OFT is now defunct, but hopefully the guidelines will still hold in court.

Basically, it says that even if you sign a contract, under English law, you are only bound to the core terms. Termination fees that are excessive or unfair (see 3.58 in OFT365), they would consider to be unfair contract terms, and we will not be bound to it. This is the stance I'm currently taking with my LA, and I'm trying to get in touch with LL to negotiate outside of LA's terms. Will let you all know how it develops. What do you guys think of OFT365?

You're wrong, because that's not what it says.


You are bound by all terms, however some are deemed to be unfair and generally the guidelines say that those terms which are significant but buried in the agreement are more likely to be unfair.

ReallyConfused

Thanks for the response Guest101, only realized it's an old thread after I posted. It sounds like I should post my full problem separately. But keeping to OFT 365, it says:

Disguised penalties

3.58 We will object to any term that requires excessive payment in the event of the tenant's early termination of the agreement, or where the tenant does anything else against the landlord's wishes. A penalty clause may have the appearance of a 'core' term, 25 but, if it has the effect of an unfair penalty, the form of the term is not relevant and it will be regarded as a penalty clause. A penalty cannot be made fair by transforming it into a provision requiring payment of a fee for exercising a contractual option. For instance, we would object to a term requiring payment of the full rent for the whole period of the tenancy where the tenant ends the tenancy early. We are unlikely to object to a term requiring a tenant to pay a reasonable re-letting fee and the rent due until the property is re-let, where this would be less than the outstanding rent for the remainder of the fixed term.

As you say quite clearly that I'm wrong, have I misread this, or is it that the OFT guidelines no longer apply? Thanks again!

Guest101

ReallyConfused wrote: »

Thanks for the response Guest101, only realized it's an old thread after I posted. It sounds like I should post my full problem separately. But keeping to OFT 365, it says:

Disguised penalties

3.58 We will object to any term that requires excessive payment in the event of the tenant's early termination of the agreement - the tenant wishing to terminate the tenancy early is a request to alter the contract. The LL can ask for ANYTHING in return. A new car, redecorate the house, 10 KGs off tobacco.... The OFT have worded this poorly as the alternative is the tenant simply pays the outstanding rent for the duration of the tenancy , or where the tenant does anything else against the landlord's wishes - This would be more applicable, as often a penalty may be attached to clauses. This is where the reasonable vs excessive argument would apply . A penalty clause may have the appearance of a 'core' term, 25 but, if it has the effect of an unfair penalty, the form of the term is not relevant and it will be regarded as a penalty clause. - Penalty clauses are VERY difficult to enforce, as the intent is to prevent an action, not remedy a breach. What you talk about are 'fees' which you pay for a service. A penalty cannot be made fair by transforming it into a provision requiring payment of a fee for exercising a contractual option. - That's a very focused statement which covers a very broad range. It certainly cannot apply to letting agent fees, as letting agents aren't a party to the tenancy. For instance, we would object to a term requiring payment of the full rent for the whole period of the tenancy where the tenant ends the tenancy early. - but it's a ridiculous statement as rent is a debt. It is owed for the duration unless agreed otherwise. We are unlikely to object to a term requiring a tenant to pay a reasonable re-letting fee and the rent due until the property is re-let, where this would be less than the outstanding rent for the remainder of the fixed term. - 'less than the remainder', less by how much £0.01 ?

As you say quite clearly that I'm wrong, have I misread this, or is it that the OFT guidelines no longer apply? Thanks again!

The OFT guidelines are just guidelines, they hold no legal meaning, and in this case there are a number of issues, as highlighted.


However for the purposes of 'fees', these cannot be a penalty, unless the fees 'must' be paid.


You do not have to renew your tenancy, so the fees are optional and cannot be punitive.

ReallyConfused

Ok, that's very clear, thanks. The underlying clarification for me is that the early termination fee is not a "must" but occurs only if I terminate early, thus it is optional and not punitive (eventhough in substance it is not an option at all, since I can no longer afford to pay the rent). I'll need to reconsider my options, and hope that the LL is more amenable than the LA to a surrender + new tenant.

Guest101

ReallyConfused wrote: »

Ok, that's very clear, thanks. The underlying clarification for me is that the early termination fee is not a "must" but occurs only if I terminate early, thus it is optional and not punitive (eventhough in substance it is not an option at all, since I can no longer afford to pay the rent). I'll need to reconsider my options, and hope that the LL is more amenable than the LA to a surrender + new tenant.

Whilst I sympathise, that's not really the LLs fault, so why should they lose out?


(and I support tenant rights more than most)