Here is a question to the blog clinic from Sue who is a tenant
We would like to end a 2 year fixed AST, 12 months in (no break clause) due to an unexpected, upcoming move for work to Asia.
We immediately agreed in writing to remain responsible for rental payments until new tenants were found. Also to pay a re-letting fee of almost £ 800.00.
However two weeks into marketing the landlord has turned down two lots of replacement tenants, who were willing to sign an 18 month and 24 month fixed term agreement respectively. Subsequently adding the following clause to the website ‘Six month tenancy only”
Initially there was a lot of interest as rental properties around this area are snapped up quickly, we didn’t anticipate any problem. However since the addition of the six month clause we have had two viewings cancelled and to date no further interest in the property.
We strongly believe the landlord’s intention is to sell and not to re-let.
There is a For Sale board outside the house, but no To Let sign. Several sales viewings have also taken place.
We questioned the landlord’s intentions and we were told that both options would be marketed simultaneously “we will go with whatever comes along first” was the reply.
This is obviously not the case as serious tenants were rejected and chances of finding new tenants are now greatly reduced due to this restrictive clause.
We now feel that the goalposts have been moved and this imposes an unfair financial burden on us.
Finally we decided to ask the the landlord to accept our surrender (considering that rejection of potential tenants could go on forever) and received the following answer:
“In answer to your question re the landlords accepting the surrender of the tenancy at the end of November – I am sorry but this is not something they will agree to unless they do get a purchaser”
Do we have any rights at all here?
We were wondering if the following applies:
“penalty clauses are designed to compensate the landlord for their loss, with the view to putting them back to their original position”
…rather than putting them in a position they would like or prefer to be in, which feels akin to profiting from our breach!
Answer
I have some good news and some bad news Sue. Lets have the bad news first.
The bad news
Tenants do not have any right to end their tenancy early – and the landlord is under no obligation to ‘mitigate his losses’ if a tenant moves out early.
By signing the tenancy agreement you are making yourself liable for rent (on a month by month basis or whatever) for the fixed term period.
So the landlord is technically within his rights to refuse to co-operate.
The good news
There is a bit of light on the horizon however.
One way for a tenant to ‘get out’ of a tenancy is to assign it to someone else. Landlords will not normally want this as they prefer to choose who is in their property. So tenancy agreements invariably prohibit assignment.
The Office of Fair Trading (whose function has now been taken over by the Competitions and Markets Authority (CMA)) published some guidance on Unfair Terms in tenancy agreements in 2005.
In this guidance the OFT stat (Group 18(d) on p55)
Our concerns arise only where contract terms allow landlords to refuse to accept the early surrender of fixed term agreements and insist that tenants pay rent for the whole of the period of the tenancy.
If tenants need to leave, it is not fair for them to be bound to pay rent if another suitable person is willing and able to do so.
For this reason we consider that, in fixed term tenancies, an absolute ban on both assignment and subletting may be considered unfair.
So you need to take a look at your tenancy agreement and see what it says about assignment. If there is an outright prohibition and no other ‘get out’ clause anywhere in the agreement, it is possible that, as per the OFT Guidance, the prohibition may be unenforceable.
So what you need to do is
- find a tenant who is willing to take over the rest of your tenancy (don’t wait for your landlord to do this as clearly he won’t – and actually he does not have to)
- contact the landlord and ask them to sign up the new tenant
- If he refuses unreasonably then say that in the circumstances you consider that the prohibition against assignment is void and that you are entitled to assign this tenancy
See what happens. Hopefully the landlord will then agree.
If not see about going ahead with an assignment. However I suggest you take some legal advice from solicitors at that time, who could deal with the assignment paperwork for you.
And finally
As regards the last part of your question – this question is not about a penalty clause. This is about whether you are entitled to end the tenancy or not!
If what Tessa says is true (and I’m ready to accept her word for it), you can easily just contact the people who were interested in the property originally, but got shot down.
However, there is something you need to consider in this move. Forcing the landlord out of their will can get you off the deal, but at the same probably will set up the new tenants for a rough stay.
The landlord (assuming he’s a human being) will most definitely reflect on the whole story and with you gone, the tenants will be in his cross-hairs.
Just have that in mind if you want somebody you know take the tenancy off your hands. You might be serving them a soup to cold and sour for their tastes.
The issue, of course, is that this OFT guidance goes against established tenancy and contract law: A fixed term tenancy can only be ended early by surrender, which requires that the landlord accepts it and he has no obligation to do it.
@Romain Assignment however is not ‘ending’ the tenancy – it is selling it on to someone else (like you do with long leases).
Personally I think assignment is inappropriate for short lets, but for this lady it may be her only option.
I can’t see any tenant taking it on if they know the landlord doesn’t want them to? So in practice that might be a difficult one to pull off.
In reality, what is stopping the tenants from withholding rent immediately? If they hadn’t told the landlord about the job in Asia, he would surely serve a S.8 ground 8 notice once 2 month’s arrears have built up (perhaps as well as s.21) they can then leave 2 weeks after the s.8 is served once it’s expired can they not? (and pay back the rent when they do and bob’s your uncle). Or have I missed something with this cunning plan?
The section 8 notice does not end the tenancy. It is arguable that the landlord would be entitled to still claim rent until the end of the term if they moved out after getting the notice.
Mind you, I suppose if they are in Asia it will be difficult for the landlord to pursue them there …
Sorry to continue off on a tangent here..but if the landlord did serve s.8 and the tenants then left on the day the notice expired; handed the keys back and the landlord accepts the keys. Does this not mean the landlord has accepted the tenancy has ended or it has been ‘surrendered’?
“..if the landlord did serve s.8 and the tenants then left on the day the notice expired; handed the keys back and the landlord accepts the keys. Does this not mean the landlord has accepted the tenancy has ended or it has been ‘surrendered’?”
Possibly. The question to ask though is whether in all the circumstances there has been a surrender. There is nothing magical about keys. They cannot replace conveyancing! The certain way to surrender a tenancy is by deed. Absent a deed there will be a surrender if it would be inequitable for either party to deny there had been a surrender. There has to be an unequivocal act by at least one of the parties. If the tenant actually vacates, hands over the keys and says he wants to end the tenancy and the landlord takes the keys and confirms the tenancy is at an end, then there will be a surrender. Whether a section 8 notice has been served is a red herring. It cannot form part of an agreement to surrender (not the same as an actual surrender) because an agreement to surrender must follow the formalities of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.