Break clause in short-term AST

Moskovite

My landlord offered me a 6 month assured shorthold tenancy with a clause which allows me to give a two months' notice at any time.
My concern is that this break clause is not enforceable by law and I may end up being responsible for paying rent for the entire duration of my fixed term (6 months).
I know that including a break clause into long term contracts is a standard practice (say you can serve a notice after 6 months into 1 year deal) but I am worried it may not be applicable for short term agreements. 
Am I overreacting or there is a genuine risk to be legally bound there? 

greatcrested

You are overreacting, but to be sure, please quote the exacting wording of the BC.

Grumpy_chap

I understood the minimum term of AST to be 6 months.  This changed, so it can start with periodic tenancy from the outset.  I would say the inclusion of the break clause has the effect of making it a periodic tenancy AST, not a fixed term AST.
But, what is the scenario where you would wish to activate the break clause on such a short contract?

greatcrested

Grumpy_chap said:

I understood the minimum term of AST to be 6 months.  This changed, so it can start with periodic tenancy from the outset.  I would say the inclusion of the break clause has the effect of making it a periodic tenancy AST, not a fixed term AST.

This forum is great for learning, so...

No, there is no minimum term for an AST. Indeed it could in theory (and in law) be for one day.

The reason people believe 6 months is the minimum is that the Housing Act makes it impossible for a landlord to evict within the 1st 6 months, but that is a different matter.

A 3 month AST, for example, means that after 3 months, the tenant can leave, since the contract has expired. But if the tenant stays, the LL must wait another 3 months before he can evict. Hence very few LLs offer ASTs of less than 6 months. Plus of course, the overheads involved in very short ASTs make them uneconomic for most LLs unless the rent is exhorbitant!

As for a Break Clause making the tenancy periodic, I'm afraid that is even more ... errr.... untrue!

Nothing has 'changed'. An AST has always been able to be contractually periodic from the start, if that is what is agreed.

See

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

But, what is the scenario where you would wish to activate the break clause on such a short contract?

i agree it's unusual, but perfectly legal. It would indeed perhaps have been simpler to create a Contractual Periodic Tenancy from the start. However, a 6 month fixed term, with a BC at 3 months, is perfectly legal if properly written.

As to how to activare it, well until we see the exact wording, there's no way we can tell!

Moskovite

The scenario is I'm waiting for my new build apartment completion which was due to be finished by end of Sep but now got pushed back to Oct-Nov (with Covid uncertainty this is not final). I am currently renting on a basis of periodic tenancy and offered a written version of agreement citing I have to give a 2 months' notice instead of just one (required by law). To which they countered with the 6 month AST proposal and 2 months break close. Effectively both things are the same thing but landlord wants a "contract" rather than dealing with rolling tenancy. My concern is they insist on AST so I was wondering if it's because such break clause was unenforceable and it's just some form of a legal trap. But like some other member said here maybe I'm overreacting. Anyway, thanks for your comments. 

saajan_12

Moskovite said:

The scenario is I'm waiting for my new build apartment completion which was due to be finished by end of Sep but now got pushed back to Oct-Nov (with Covid uncertainty this is not final). I am currently renting on a basis of periodic tenancy and offered a written version of agreement citing I have to give a 2 months' notice instead of just one (required by law). To which they countered with the 6 month AST proposal and 2 months break close. Effectively both things are the same thing but landlord wants a "contract" rather than dealing with rolling tenancy. My concern is they insist on AST so I was wondering if it's because such break clause was unenforceable and it's just some form of a legal trap. But like some other member said here maybe I'm overreacting. Anyway, thanks for your comments. 

No, its because many LL and LAs don't understand that a periodic tenancy is equally a "contract" and so feel like they want consecutive fixed terms. 

To be sure, please quote the entire clause containing your break clause. It is entirely possible to have a break clause which you can trigger as soon as you move in, and its equally possible to have one that only triggers after x months. Just depends on what's written. 

greatcrested

Moskovite said:

The scenario is I'm waiting for my new build apartment completion which was due to be finished by end of Sep but now got pushed back to Oct-Nov (with Covid uncertainty this is not final). I am currently renting on a basis of periodic tenancy and offered a written version of agreement citing I have to give a 2 months' notice instead of just one (required by law). To which they countered with the 6 month AST proposal and 2 months break close. Effectively both things are the same thing but landlord wants a "contract" rather than dealing with rolling tenancy. My concern is they insist on AST so I was wondering if it's because such break clause was unenforceable and it's just some form of a legal trap. But like some other member said here maybe I'm overreacting. Anyway, thanks for your comments. 

You still have not quoted the wording of the Break Ckause. You want legal advice? Provide legal information!

However, your options seem to be

1) agree a 6 month tenancy with a suitably worded Break Clause (probably requiring 2 months notice)

2) agree a Contractual Periodic Tenancy (again probably requiring 2 months notice)

3) do nothing and continue on your existing periodic tenancy, which may be Statutory (requiring a full tenancy period's notice) or Contractual (requiring whatever notice the current contract specifies)

See

Post 4: Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

Moskovite

greatcrested said:

You still have not quoted the wording of the Break Ckause. You want legal advice? Provide legal information!

However, your options seem to be

1) agree a 6 month tenancy with a suitably worded Break Clause (probably requiring 2 months notice)

2) agree a Contractual Periodic Tenancy (again probably requiring 2 months notice)

3) do nothing and continue on your existing periodic tenancy, which may be Statutory (requiring a full tenancy period's notice) or Contractual (requiring whatever notice the current contract specifies)

Thanks for your response and apologies for the lack of the actual wording (I don't have it yet). I was just verbally informed about it today and requested a draft version of the new AST agreement to be sent my way.
Landlord previously issued a notice to vacate the property (just in time when it was still 3 months) and I need to move out by mid November. I am trying now to void this notice by going into this 6 months AST.
My existing periodic tenancy is statutory (fixed 1 year contract ended in June 2020). While initially landlord was okay with the rolling nature of the current tenancy, they now want to have some  security added to it hence the "contract" demands. 

greatcrested

No you do not "need to move out by mid November". The LL's S21 Notice in mid August simly says that the LL might thereafter seek possession. It does not end the tenancy. And given the current  Covid reguations and court backlogs, it will realistically take another 6 months after that before you "need to move out".

Assuming the LL actually takes that action, which would seem pointless even quite apart from the timescales; why take legal action to evict a good, paying tenany if you don't actually need the prperty vacant?

As for seeking security, a 6 month tenancy with a 3 month break Clause gives the LL so little additional security (1 month more?) as to be meaningless.

Out of interest, is there an agent behind this? Who stands to earn a commission for implementing a new contract......?

Moskovite

Greatcrested, thank you again for your input, I must say you're making some good points there and you're right it's the agency/agent that offered a new AST as a "compromise" between us. I pointed at meaningless nature of 6 month AST with a 2 months break close in it as well (compared with current rolling tenancy the landlord will only gain an extra month of notice, nothing else) but I was told the main motive for landlord was to have a "contract" rather than "nothing".
Regarding seeking possession at the end of the S21 notice: even though landlord is unlikely go to court I'm worried this somehow can affect my credit history (tell me if I'm talking rubbish) or somehow negatively affects me (I end up paying huge costs associated with court proceedings or landlord/agency can change the locks or create some conflict situation after renting it out to a new tenant (who will agree to 1 year contract). As long as all above is just my fantasy I'm happy to sit out the wait time for my new build flat in my current apartment (strictly speaking there's a chance completion happens even before the S21 notice expires in November so I could move out without upsetting anyone). 

greatcrested

Moskovite said:

Regarding seeking possession at the end of the S21 notice: even though landlord is unlikely go to court I'm worried this somehow can affect my credit history (tell me if I'm talking rubbish)

You are talking rubbish!

or somehow negatively affects me (I end up paying huge costs associated with court proceedings

well only if it goes to court which seems unlikely

or landlord/agency can change the locks

that would be a criminal offence contrary to the Protection from Eviction Act 1977

or create some conflict situation after renting it out to a new tenant (who will agree to 1 year contract).

how can there be a conflict with you after your tenancy has ended? (Other than over your deposit which is protected in a government scheme(?) for precisely this reason)

As long as all above is just my fantasy

Yup!

I'm happy to sit out the wait time for my new build flat in my current apartment (strictly speaking there's a chance completion happens even before the S21 notice expires in November so I could move out without upsetting anyone). 

Don't forget though that if/when you do want to move out, you need to either serve proper notice, or request an 'Early Surrender' with the LL's agreement.