Unfair Break Clause in Tenancy Agreement

kaboo · 23 July 2019 at 9:22PM

Hi all,
My landlord with whom we have been renting for several years has recently changed the letting agent. The new agent has drawn up a new contract which differs significantly from the old contract in the use of break clause. In the old contract, break clause could be used to end the tenancy early by giving two months notice such that the tenancy would last at least first 6 months, i.e. 2 months notice can be given at the earliest after first 4 months of the tenancy. The clause was identical for both the landlord and the tenants in all conditions.

The new agent's contract says that the landlord or the tenant may give two months notice to end the tenancy after the first 4 months, meaning a minimum term of tenancy is no less than 6 months. However, the new clause puts a bunch of conditions only for tenants that include, if tenants use the break clause then they will pay the re-letting fees because the landlord will incur expenses in re-letting the property as a consequences of tenants ending the contract early (wouldn't this fees be incurred when tenants leave at the usual end of the contract?). Also, tenant will continue to pay rent even after the notice period until a new tenancy can be found. However, in the new contract, landlord can use the break clause by giving the 2 month notice, and they don't have to pay any penalty, charges, etc.

This seems unfair to us because we understand that as per the Consumer Rights Act 2015, the break clause must apply equally to the landlord and the tenant to be valid. It applied equally in the previous contract but now it gives powers to the landlords to kick tenants out after 6 months leaving us vulnerable to eviction, but deters us from ending the contract early if our circumstances change.

What do you all think? MSE forums are so useful for information on such a variety of topics and I thought may be I could get some advice here. Thank you in advance!

da_rule · 23 July 2019 at 9:26PM

Just to clarify, is this a 12 month tenancy with a break clause at 6 months with 2 months notice?

Why do you think the Consumer Rights Act says that clauses must be equal?

diggingdude · 23 July 2019 at 10:05PM

No need to sign a new contract at all

kaboo · 23 July 2019 at 10:07PM

Hi, thank you for replying.
Yes it a 12 month tenancy agreement but we have been renting this property for several years. Every year we just have the agreement renewed.

This is what I understood from reading through a few blogs/websites that break clauses should apply equally to both parties. For example Landlord Law forum says "Break clauses.
These are clauses which allow a party to end the agreement early by following the procedure set out in the clause (e.g. service of two months written notice). They must apply equally to the landlord and the tenant to be valid."
and Shelter England says that Fairness
A break clause must comply with consumer protection law and be fair. Also, Using a break clause
Your agreement may say you can give notice if you need to move out early. This is called a break clause. It will usually say you must give notice in writing. When your notice ends:

the tenancy ends
your right to live there ends
you're not liable for ongoing rent

Also, I read somewhere, where I cannot seem to find now, that fairness of a clause is decided by understanding the consequences in absence of the questionable clause, and then deciding if addition of the clause causes imbalance to one party. In this case without break clause neither party can end the agreement early (unless there is a breach) but after the break clause landlord enjoys more power/less liability than tenants.

Of course I am not sure and thats why am asking if understand it correctly.

kaboo · 23 July 2019 at 10:17PM

Londlord doesn't want a rolling month-by-month tenancy. They really want a 1 year agreement. I would not have rented this property if the break clause in its current form was added when I first rented it 4 years back. But now after living in this property for several years and having a 18 month old child going to nursery nearby, I am not very keen to move. The new contract drawn up by new agent has changed the conditions in the break clause, and any polite request for reconsideration or change from our side is met by rudeness and reluctance to such an extent that the agent has recommended to landlord to not change from his "standard and reasonable agreement". Even though the equally applied and fair (in our opinion) break clause was previously agreed by landlord, and has been part of the agreement over the last 4 years.

G_M · 23 July 2019 at 11:19PM

The landlord has every right to offer you a new fixed term contract (eg for 12 months) with different terms to the previous contract. You are free to agree it, reject it, or discuss and negotiate it.

The change of agent is irrelevant. The agent simply acts for the LL.

If you reject the new contract, you can either

* end the tenancy and leave or
* move to a periodic tenancy on the same terms as before (other than the notice requirements). Whether the LL "wants a rolling month-by-month tenancy or not", if you simply wait till the current fixed term ends without signing a new one, and remain, a 'rolling' periodic tenancy will commence.

Having said all that, I agree with you regarding the Break Clause. It is not a Break Clause. A Break Clause defines the notice period required to implement it (eg 2 months) and when that period expires, the tenancy ends, whether or not a replacement tenant has been found.

What that clause appears to define are the terms under which the landlord will agree an 'Early Surrender'. This is different to a BC, and is dependant on both parties mutually agreeing. You as the tenant cannot impose an ES on the LL, even by serving the stated notice. It requires mutual consent. The clause simply indicates the terms under which the LL might agree.

And yes, you are also right that a BC must either apply equally to each party, or must be to the advantage of the party who did not draft it (in this case, you).

Is that clause actually headed "Break Clause"?

See also
* 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?

kaboo · 23 July 2019 at 11:25PM

Yes that clause is actually headed Break Clause. And when we tried to point out that it sounds more like an early surrender/termination clause and not as a break clause then the reply we got from the agent was very rude - basically on the lines of I know what I am doing, this is a very standard agreement with reasonable T&Cs, and I dont see a reason to change it. We have not heard back from Landlord yet...

I agree with what you said earlier, it LL's decision if they want a fixed contract and we are happy with their choice. What we dont like is how in the new contract LL can throw us out after 6 months under this "Break Clause" but we have to suffer penalty and continued rent payment if we chose to leave.

kaboo · 23 July 2019 at 11:26PM

"if you simply wait till the current fixed term ends without signing a new one, and remain, a 'rolling' periodic tenancy will commence." - can't the landlord force me to evict if I do not sign a new fixed term contract?

G_M · 23 July 2019 at 11:43PM

kaboo wrote: »

"if you simply wait till the current fixed term ends without signing a new one, and remain, a 'rolling' periodic tenancy will commence." - can't the landlord force me to evict if I do not sign a new fixed term contract?

Once you are on a periodic tenancy, by definition you have less security. The LL could serve you a S21 Notice (giving you 2 months), and after that could, if he chose, apply tocourt for possession (likely to take another 2 -4 months).

But why would a LL choose to spend money evicting a reliable tenant, and then face a void between tenants with no rent, not to mention the cost of finding a replacement?

What we dont like is how in the new contract LL can throw us out after 6 months under this "Break Clause" but we have to suffer penalty and continued rent payment if we chose to leave.

Well if that happened you could challange the Break Clause. To implement the BC and evict you, the LL would have to not only serve you notice as per the BC, but would also still have toserve a S21 Notice and apply to court.You could challange the BC in court and the judge would (probably!) throw it out.

kaboo · 23 July 2019 at 11:47PM

@G_M, thanks a lot. What would happen in the situation when we want to leave after 6 months - we serve two months notice, evict on the date mentioned in the notice, and then refuse to pay any ongoing rent after the notice period? The break clause as indicated in the contract - would it be enforceable and we will have to pay the re-letting fees and ongoing rent?

saajan_12 · 24 July 2019 at 10:19AM

kaboo wrote: »

@G_M, thanks a lot. What would happen in the situation when we want to leave after 6 months - we serve two months notice, evict on the date mentioned in the notice, and then refuse to pay any ongoing rent after the notice period? The break clause as indicated in the contract - would it be enforceable and we will have to pay the re-letting fees and ongoing rent?

Arguing a clause is unfair because it is imbalanced is one thing - so you can argue the entire clause isn't enforceable. Either side is then left with asking for and negotiating the terms of an early surrender, for which the other side can demand whatever they choose or just refuse.

Its quite a leap to enforce a stronger clause with a break clause with 0 penalty.

You can't argue a clause is unfair but have it (and more) apply when you feel like it.

PLEASE READ BEFORE POSTING

Unfair Break Clause in Tenancy Agreement

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free