This is a question to the blog clinic fast track from David (not his real name) who is a tenant.
I have a 3 year AST on a property which I am renting and I negotiated a 12 month break clause. The rental period started on 2nd May 2017 and I am thinking of exercising the break clause but am concerned by ambiguous wording within the contract:
“Mutual Break Clause (rolling)
Should either the Landlord or the Tenant wish to terminate the Tenancy upon or after such date as is twelve months from the Commencement Date of the Tenancy and shall first give to the other party at least two months’ notice in writing to that effect and (in the case of the Tenant only the Tenant shall pay all rents and other monies due and observe and perform the Tenants obligations on a timely basis ), THEN upon the expiry of such notice the Tenancy shall cease and the Tenant shall yield up vacant possession of the Premises WITHOUT PREJUDICE to the right of either party to make any claim against the other for any previous breach of the terms, agreements and obligations of this Tenancy Agreement. FOR THE AVOIDANCE OF DOUBT the Landlords or the Tenants notice shall not take effect and terminate the tenancy before 1st May 2018 and any notice purporting to terminate the Tenancy at an earlier date shall be of no effect.”
Does this mean that we are not able to give notice before 1st May (and therefore are obliged to pay rent up to the 1st July – ie 1 year and 2 months after the commencement of the tenancy) or that we are not allowed to leave the property before 1st May (ie are we able to give the required 2 months’ notice on 1st March)?
The sentence that says “For the avoidance of doubt” actually in my opinion creates more ambiguity – ie is it the notice period that cannot take effect before 1st May or the actual termination date? If it is the latter then that is in line with what I was expecting when I signed the contract.
Answer
My reading of the clause is that you cannot serve a notice which will end the tenancy before 1 May 2018. Which I take to be the meaning if the words
‘shall not take effect and terminate the tenancy before 1st May 2018’
This must mean that your notice CAN terminate the tenancy on or AFTER 1 May 2018. It is only termination before then which is not allowed. So, for example, your notice can terminate the tenancy on 1st May itself or any day after that.
If you serve a notice before 1 March the notice cannot end the tenancy after two months so your period will need to be longer. There is nothing wrong with giving a notice period which is more than two months. It is only a notice period which is less than two months which will be of no effect.
Incidentally, the landlord cannot actually stop you vacating the property before 1 May (i.e. he can’t shackle you to the walls!), However, if you do leave early, you will remain liable for the rent up to at least 1 May, depending on when you served your notice.
WIth notice periods it’s all about the rent that you are liable for. If you don’t want to, you don’t have to live there- indeed you don’t actually have to live in the property at all and I know that there have been times when a tenant has rented a property but not lived there for some reason or another.
Landlords won’t like it if you are not living there during the tenancy as it may mess up their insurance but it’s actually up to you what you do.
Slightly tangentially, what is the difference between a one-year AST and a three-year AST with a break clause at the one year mark? I’ve been scratching my head about this ever since I heard of such a thing, and housing law training hasn’t helped.
The only difference as far as I can see is that the tenant cannot walk away with no notice after a year with the break clause
With the 3 years + break clause, the ending after 1 year is optional.
If it is not ended then there will be no agents renewal fees (although when the tenant fee ban comes in there won’t be any anyway).
Generally, agents like long fixed terms as they can take their commission for all 3 years up front. Which is bad news for the landlord if the tenant proves unsatisfactory and has to be evicted early!
It’s for the landlord to be on the ball and to negotiate sensible terms with his agent, really: For a 3 year fixed term tenancy with a tenant break clause after 1 year a landlord should make clear that any up front payment will only be for the first year of the tenancy .
Is the Consumer Rights Act 2015 relevant here? As only ‘fair’ terms are binding on the consumer and terms would only be deemed fair if they’re transparent and expressed in plain and intelligible language?
Also, my understanding is that if a term could have different meanings, the meaning that is most favourable to the consumer is to prevail?
So if the tenant gives notice and it’s deemed to be ‘wrong’ as per the landlords/agents interpretation or how they meant for it to read – the term would be void and/or must be read in favour of the tenant?