Here is a question to the blog clinic (fast track) from Hazel (not her real name) who is a guarantor.
I am a guarantor of a 12 month AST joint tenancy for my 21-year-old granddaughter start date November 2017. The flat is in poor condition and of a ‘budget student’ standard
There is no gas certificate that we know of or inventory but the deposit is in DPS scheme.
The other tenant also has a parent guarantor and wishes to stay in the flat. There is no break clause and no right to assign.
(3.12) Not to assign, or sublet, part with possession of the Property, or let any other person live at the Property, without the written consent of the Landlord or his Agent.
Unfortunately, due to depression my granddaughter lost her job in January 2018, ( could get doctor note ) but found a new one abroad and is leaving the country.
She found a new tenant that fulfilled all the original vetting criteria and one that the joint tenant wanted to move in to replace her. This tenant provided a full guarantor and all the same criteria for the let in November 2017 was met and there would be no loss of rent.
However, the landlord refused. We had to let that potential tenant go to discuss options with him as he said he would be ‘trespassing’ if he moved in. I appreciate that this is an ‘unregulated market but can the landlord really do the following?
We have now entered a protracted correspondence with the landlord ( in fact a friend acting as agent to the landlord ) who has produced a set of fees and a surrender agreement for us all to sign so that the tenancy is terminated at a date undisclosed and at the discretion of the landlady on finding new tenants under extremely prohibitive income and guarantor rules, different and setting the bar higher and more onerous than before.
In addition we are signing and agreeing to costs yet to be revealed, admin costs all amounting to approx £1,725 letting agent fees including his own personal admin costs d rising as many are not fixed. Whilst we are willing to pay reasonable costs and penalties we have know way of knowing how they might get out of hand especially as one cost of failed referencing amounts to £50 a time and the landlord requires further compensation fees if tenants fall through. The costs seem unfixed.
The main worry is the new bar that has been set for new tenants for accommodation of this budget level seems so prohibitive to finding replacement tenants and guarantors that it is designed to punish us and we would have to pay to the end term of the tenancy plus all the feesto terminate when the termination will never actually take place as we have no reassurance or guarantee.
However my research led me to believe that we may have a case too in terms of assignment, in that he has been unreasonable in that we found another tenant under same criteria as before but he refused.
(Finding another tenant – If you are able to find a suitable tenant yourself, your landlord should agree to re-let to them and let you off the hook. If they refuse (and there is no provision on the tenancy agreement for ending early), then the Office of Fair Trading Guidance on unfair terms indicates that any contract clause forbidding assignment of the lease after 3 months will be invalid.)
Can you help with this? Either we insist he must let us assign ( we have now lost that previous tenant and had to compensate the joint tenant in lost rent ) or should we do the termination under risky fees and he may not find tenants?
I have documents and evidence of all the above.
This is a very difficult situation and guarantors have few rights.
Unless there is a break clause in the tenancy then a tenant does not under the current law, have any rights to end a tenancy early.
There is also a case (Reichman & Dunn v Beveridge & Gauntlett from 2006), admittedly involving a commercial tenancy but at the moment it applies to residential tenancies, which says that if a tenant wants to leave early, a landlord has no duty to ‘mitigate’ his losses and will be entitled to continue to demand the rent from the tenant – even if they are no longer living there – on a month by month basis.
The prohibition against assignment
There is an argument that a tenant should be able to assign a tenancy if the landlord unreasonably refuses to grant a new tenancy to a replacement tenant.
This is the argument that you mention and it is based on the old Office of Fair Trading guidance on unfair terms from 2005. This stated that the OFT would consider an absolute prohibition on assignment to be unfair if there was no break clause or other way to end the tenancy early after 3 months.
However, so far as I am aware, this has never been tested in the courts and I am not aware of any actual case which supports this view. The Guidance is no longer supported by the Competitions and Markets Authority which took over this part of the Office of Fair Tradings remit when they closed down in 2014.
Rights of one joint tenant wanting to leave
The situation here though is that only one of joint tenants (your granddaughter) wants to leave. The other tenant wants to stay.
Even if assignment were allowed, one of joint tenants cannot assign her share to another new joint tenant – I dealt with this here. Although I suppose a deed of assignment could assign the tenancy from A and B to A and C.
The lawyer’s answer
If you are looking at strict legal rights, the landlord is, I am afraid in the right.
He can just dig his heels in, refuse to allow any changes and just demand his rent on a month by month basis. Or, as he has done, make expensive demands as a condition of granting a new tenancy to new tenants.
After all, a tenancy is a legally binding agreement. It is a serious commitment and people should take care before they sign it. The landlord has complied with his part by providing the accommodation. Tenants are expected to comply with their part of the bargain by paying the rent. It is unfortunate that no break clause was added to the tenancy agreement.
An assignment is a possible answer – so long as the assignment is of the A and B to A and C variety and not an assignment just of your grandaughters beneficial interest. However, I am always unhappy with assignment in short let situations and there is always a danger that it could be found invalid. I am also not sure how it would affect your position as guarantor.
Leaving aside any question of assignment, you as guarantor will only be actually liable if the guarantor makes formal demand on you.
If that happens you have the right to claim back any money you pay over to the landlord from your granddaughter as she is the real cause of this problem. If she were still living in the property all would be well. Is it right that she should just go swanning off to a new life abroad leaving you and the other tenant to sort out the mess?
That is the strict legal answer. I realise it will not make you happy! However, it’s not the only answer.
There is no doubt that this landlord’s attitude is thoroughly unhelpful and clearly he is looking to gain financially from the situation. Any reasonable landlord (and there are many) would have agreed to the change of tenant suggested originally.
If the landlord has not played fair with you there is no moral obligation on you to play fair with him. So below are a few suggestions. But first, lets consider
The landlord’s rights
Landlords often have an exaggerated view of their power over a property once it has been let. In fact, although they may technically have rights under the tenancy agreement they have very few legal ways to enforce them – they have lost physical control of the property by renting it out. Indeed it is arguable that in a sense it is now ‘owned’ by the tenants. A tenancy is after all a legal interest in land.
In reality, the rights of a landlord are to receive the rent as per the tenancy agreement and to receive the property back in the same condition it was let it (save for fair wear and tear) at the end of the tenancy.
Discover and keep a record of any landlord breaches
I would be surprised if a landlord like this is complying with all his legal obligations. You have already mentioned one serious breach – failure to provide a gas safety certificate. Unfortunately, this does not help particularly in this situation, but I suspect there may be other breaches on his part.
I suggest that you and the tenant start keeping a record or diary of any problems that occur with the property. For example, there may be things in disrepair. And although the deposit was properly protected, did the landlord serve the correct form of prescribed information? If he didn’t then there is a potential claim against him for the penalty.
When you look, you may find quite a few beaches. In fact, they may be sufficient to give you more leverage in your negotiations regarding changing the tenant. Otherwise, proceed as follows.
Stop negotiating with him
Just say that you are not willing to pay these extra charges and that you will ensure that his rent is paid. You could perhaps imply that your granddaughter is thinking of coming back.
Recoup losses by short-term subletting
The obvious answer to this situation is for the remaining tenant to just pay him his rent and then seek to recoup it by either renting out your granddaughters’ room to a long-term lodger or on short lets using a service such as Airbnb (she could even make a profit).
This solution though is dependant upon the co-operation of the remaining tenant. As a guarantor, you have no right to insist on this. It is also strictly speaking a breach of the terms of the tenancy.
If you go down this route, there is no need to tell the landlord about it or indeed to tell him anything at all. In fact, it is probably best to contact him as little as possible. Just pay him his rent and keep quiet.
If he does ever find someone else staying in the spare room then it is just a friend. He has no right to prevent tenants from having guests.
I would not suggest this normally, but this landlord has not behaved fairly towards you. If the landlord were to bring any claim against you relating to this (if he ever finds out), you will have your list of landlord breaches which can be used in negotiations (or in the unlikely case that he goes to court – as a counterclaim).
I suspect also that any Judge will be seriously unimpressed with his failure to allow the property to be re-let to the original replacement tenant found by your granddaughter. He (or she) may even consider that the landlord has lost any right to object to subletting by his actions – although don’t count on it!
A Notice to Quit to in November
After the tenancy ends in November 2018 your granddaughter should serve a tenants Notice To Quit on the landlord – as this will end the tenancy at that time and get her (and you) off the hook for future rent.