Early Termination Fee

[Deleted User]

We have requested to surrender our 12 month Assured Shorthold tenancy at 6 months because of the financial impact on us due to Covid.
We made the request to the landlord in writing - it is managed by them. We got no reply, but the agent called on her behalf and advised that they will remarket the property.
They have asked for an early termination fee of 1 months rent + VAT which = £1,020 

I have requested, in writing, both the acceptance of the surrender, and a breakdown of the actual costs incurred because of us leaving early. I have had no response. The property is being marketed.
Our contract states:

"In the event that the Landlord agrees to a request from the Tenant to be released from the tenancy agreement before the expiry of the fixed term, apart from according to a relevant break clause detailed in Schedule 5. The Tenant hereby agrees to pay one months rent + VAT or commission incurred by the Landlord which have been negotiated and agreed between the Landlord and Tenant as a condition of the Landlord consenting to this request. This cost to be paid prior to the property being marketed for re-let. In addition to this, the tenant will remain responsible for the rent and all utilities up until a new tenancy starts."
The Tenant Fees Act 2019 says:

 "f) early termination (capped at the landlord’s loss or agent’s reasonable incurred costs) If a tenant requests to leave before the end of their tenancy you are entitled to charge an early termination fee. This must not exceed the financial loss that a landlord has suffered in permitting, or reasonable costs that have been incurred by the agent in arranging for, the tenant to leave early. This usually means that a landlord must not charge any more than the rent they would have received before the tenancy reaches its end. It is good practice to agree to any reasonable request to terminate the tenancy agreement early. 

If there are no missed rent payments, we encourage you to not charge any early termination fees unless you can demonstrate through evidence to the tenant that specific costs have been incurred (e.g. marketing and referencing costs). Any payment that exceeds the landlord’s financial loss or an agent’s reasonable costs will be a prohibited payment." 
From what I can see, anything over and above actual costs incurred would be a prohibited payment. Is that correct and what is the next step, as I'm getting no responses?

GDB2222

There are a few practical issues to consider alongside the legal ones. The landlord’s actual costs may include a void period after you move out. They cannot sign a new tenancy agreement until after you have moved out. And that’s assuming that they can get a new tenant at all quickly.  There’s the agency fee, which is probably around a month’s rent plus vat, less any rebates for the unexpired portion of your lease. Depending on where you are, current rental levels may be lower than when you signed up. So there’s a loss there.

The point I am making is that the actual costs could easily be more than one month's rent, and they won’t know that until they get a new tenant. I’m quite surprised that they are letting you off so cheaply!

theartfullodger

Agree.  The landlord or agent could otherwise simply do nothing and you would have to pay the remaining 6 months rent.

Simple choice eh?  Sorry, good luck.

macman

Your response is rather more likely to result in them rescinding their one month offer and requiring you to serve out or buy out the full remaining term.

[Deleted User]

GDB2222 said:

There are a few practical issues to consider alongside the legal ones. The landlord’s actual costs may include a void period after you move out. They cannot sign a new tenancy agreement until after you have moved out. And that’s assuming that they can get a new tenants tall quickly.  There’s the agency fee, which is probably around a month’s rent plus vat, less any rebates for the unexpired portion of your lease. Depending on where you are, current rental levels may be lower than when you signed up. So there’s a loss there.

The point I am making is that the actual costs could easily be more than one month's rent, and they won’t know that until they get a new tenant. I’m quite surprised that they are letting you off so cheaply!

They have already found a tenant. Thanks, that's all I wanted to know. I simply wanted to check that this was not an excessive fee, that's all!

[Deleted User]

macman said:

Your response is rather more likely to result in them rescinding their one month offer and requiring you to serve out or buy out the full remaining term.

I'm simply asking if this fee is excessive, that's all. Which I've every right to do. 

GDB2222

In addition to this, the tenant will remain responsible for the rent and all utilities up until a new tenancy starts."

I missed that bit. 

However, the agency fee is likely to be about a month’s rent, and you can’t really argue with that, as they can charge a commercial rate.

[Deleted User]

GDB2222 said:

In addition to this, the tenant will remain responsible for the rent and all utilities up until a new tenancy starts."

I missed that bit. 

However, the agency fee is likely to be about a month’s rent, and you can’t really argue with that, as they can charge a commercial rate.

Thanks. I had no idea that the agency fee would be that high, it sounded excessive, so I wanted to get clarification, that is all. And thanks for not piling in and being rude! I'm just asking a question. Cheers for your help. It is what it is. 

[Deleted User]

macman said:

Your response is rather more likely to result in them rescinding their one month offer and requiring you to serve out or buy out the full remaining term.

They've found a tenant already. Why on earth would they do that?! Out of sheer spite because I dared to ask for a breakdown of fees? Wow. 

davidmcn

Rainey123 said:

macman said:

Your response is rather more likely to result in them rescinding their one month offer and requiring you to serve out or buy out the full remaining term. 

They've found a tenant already.

You didn't mention that in the OP.

GDB2222

Rainey123 said:

GDB2222 said:

There are a few practical issues to consider alongside the legal ones. The landlord’s actual costs may include a void period after you move out. They cannot sign a new tenancy agreement until after you have moved out. And that’s assuming that they can get a new tenants tall quickly.  There’s the agency fee, which is probably around a month’s rent plus vat, less any rebates for the unexpired portion of your lease. Depending on where you are, current rental levels may be lower than when you signed up. So there’s a loss there.

The point I am making is that the actual costs could easily be more than one month's rent, and they won’t know that until they get a new tenant. I’m quite surprised that they are letting you off so cheaply!

They have already found a tenant. Thanks, that's all I wanted to know. I simply wanted to check that this was not an excessive fee, that's all!

It may help if I say what it has cost me, as a landlord, in a similar situation. The agent charges me 8% of  the rent as commission. So, for a year, that works out as very close to one month, and that’s what I would pay on the new tenancy. However, if a tenant leaves halfway through a year, the agent rebates me half of the commission on the tenancy that is ending early. So, arguably, my net cost is only half of the 8%. 

What is not relevant is what it costs the agent to find the new tenant, as they are not party to the tenancy agreement.

I suggest that you leave any such arguments until after the tenancy has ended.