Tenant notice on vacating when the fixed term ends
It can be very inconvenient and sometimes downright difficult, if a tenant leaves without warning.
Perhaps one of the most controversial clauses in my Landlord Law tenancy agreements is the one which says:
During the last month of the fixed term (and not later than seven days before the end of the fixed term), you must tell us whether you intend to stay in the Property or leave at the end of the fixed term.
“This clause is ridiculous” complains one landlord, “Seven days is far to short a time to deal with all that needs to be done”. “How can I arrange for a check out meeting if I am only given seven days notice?” says another, while a third points out her agreement with her letting agent obliges her to give three months notice “so surely it is reasonable to expect my tenants to give me two months”.
What none of these landlords seem to realise is that I am trying to do them a favour. In law, a tenant does not have to give any notice at all, if he wants to leave at the end of the fixed term period. None.
So under the Unfair Terms in Consumer Contracts Regulations 1999, if I put in a clause telling them to give two months notice, the Office of Fair Trading will be on my back telling me to take it out as being unlawful. For example in their 2005 guidance on Unfair Terms in Tenancy Agreements they say at paragraph 3.78:
We appreciate that landlords will want to ensure that their properties are not left empty between tenancies, but object to terms that impose a contractual obligation on the tenant to give notice in order for the tenancy to be terminated at the end of the fixed term.
That is pretty clear.
Landlords are right though in saying that it is unfair and one sided. A tenant can lead a landlord to believe that he is staying on and then swan off on the last day of the tenancy agreement leaving his landlord to find out that he has gone. The landlord will not have made any arrangements to get a new tenant in, and so will have a void. Which could cost the landlord a lot of money, particularly if he has high mortgage fees to pay.
The reasoning behind the rule of course, is that if the tenant has signed up for, say, six months, that is the totality of his commitment. If the landlord complains about him moving out he can say “Well I only signed up for six months. What did you expect?”.
The problem being however, that under section 5 of the Housing Act 1988, he can if he wants stay on, and statute will create a new tenancy, a statutory tenancy, for him. He has the legal right both to stay and to go.
If he stays on, even just one day after the end of the fixed term, then he will be required to give the landlord not less than one months notice, and the landlord can claim rent in lieu of notice if he leaves abruptly without doing this. But not if he leaves at the end of the fixed term.
In order to mitigate this harsh rule, I thought ‘What if the tenant were required, not to give formal notice to vacate, but just to tell the landlord whether or not he was leaving?”
The landlord would not be entitled to claim rent in lieu of notice if the tenant left without informing him first. However if the landlord incurred extra expenditure because of the tenants failure to keep him informed (for example if there were extra charges involved in arranging the check out meeting at short notice) then the landlord could charge these to the tenant. It would be better than nothing.
As the normal notice period a tenant has to give in most tenancies is one month, I felt that insisting that the tenant tell the landlord if he is going two months before the end of the tenancy would be vulnerable to being found unfair. I therefore picked on the wording “last month of the fixed term (and not later than seven days before the end of the fixed term)”.
I am considering changing it to not less than fourteen days, although it still worries me a bit.
But what do you think? Is my clause the best way to deal with the situation? What do you do? Do you think I am safe in increasing the minimum period from 7 days to 14?
Tessa, I would put it in and see what happens. Its easier to say you are sorry than to get permission in the first place. If we all do it then maybe the OFT will start to realise that we Landlords have rights too.
There is, IMHO, far too much pussyfooting around these days trying to be PC and ‘doing the right thing’. Stuff it – lets rebel a bit and see what happens!
how timely, i’m in the middle of this scenario as a tenant. my agmt is silent on notice to vacate at end of tenancy, only has a break clause that requires one month notice. when i informed my letting agent yesterday 9 april that we will be moving out at end of tenancy on 30 april and wanted to get the checkout clerk scheduled, they told me that i owed rent for 30 days! i thought i was doing them a favor! i’m sure i’ll prevail in this scenario. at any rate, as a tenant, i believe it’s reasonable to ask for anything up to 14 days notice of intent, but i wonder if it would obligate me to pay unforeseen charges if, for instance, my plans to vacate fell through? i think if you could mitigate this risk somehow to protect tenants, it could be considered fair. otherwise i personally would fall back on the law which favors me as a tenant.
Well, a tenant and a landlord both think that 14 days notice of intent is reasonable so maybe that is what I will do.
As regards tenants plans falling through – if the landlord incurs costs by relying on what the tenant says (ie that they will be leaving), it is only fair that the tenant should at least contribute to those costs if they are in the end wasted, because the tenant does not move out. Why should the landlord be put to expense because the tenant cannot sort out his removal plans properly?
Thank you both for your comments.
Firstly you have to remember that the OFT guidance on the Unfair Terms is just that. Their opinion and not even the regulations, never mind the “interpreted law”. Note that in the only cases I have seen with the OFT going to the highest level of court, they have lost both times. Their opinion is fallible. If you look at the clause that they give as non exhaustive examples of clause that might be unfair they even express a clause the “automatically extends a fixed term contract” as one such example. However, this has to be read with the second part of the sentence where it says “where the period of notice required is unreasonably long”. Clearly the example expects that it is OK to automatically extend, provided it meets the usual tests of making it clear etc are true, and provided the notice required is not unreasonable long.
Our agreement went to the OFT and though they were not happy with that particular clause, after making sure it was highlighted they allowed us to leave it in.
We now have another solution, if you set up a contract that starts on a fixed term and then goes periodic, ie fixed term of 6 months “and then monthly” then by contract there is no ending of that tenancy and the tenant would be obliged to give notice. It should be understood that in the above example the minimum period the tenant is entitled to remain in the property would be 7 months, otherwise you will not have given them the “and then monthly part of the agreement. If you want to avoid this you could make the fixed term 5 months and then monthly.
There are a number of other advantages to this system of operation as it avoids the tenancy going statutory periodic.
If the reference to a notice period, howsoever drafted, is unqualified then it implies it is enforceable even where the landlord is in breach of contract or some other covenant and the tenant wished to terminate as a result of that breach.
In Pratt Development Unlimited t/a Greenwood Parks the OFT said that a term requiring a licensee (licence to park a caravan on a camping site) to give two months notice, in writing, before leaving the pitch was unfair and the Park’s terms and conditions were rewritten to clarify that the clause only applied when park owner is not in breach.
Tessa, has your clause ever been litigated? As I read the clause, it only places an obligation on the tenant to notify their (honest) intention. I suspect that a tenant who says they will stay, but changes their mind, even capriciously, having manifested preparations to stay (such as, e.g. failing to cancel any utilities, not booking removals men before the notice, etc) would not be liable under your clause (and in like manner one who announces they will leave, leading to wasted costs by the landlord).
If you want to catch tenants who change their minds, I think you need to specifically draft that in, and should probably have a tightly drawn clause to assess the level of damages (e.g. fees of a nominated estate agent/seven days rent depending on which way the change is).
Is it not far simpler to enter into a 3yr AST which includes a break clause allowing 2 months notice either way after 6/12 months and rent reviews allowed (with notice) after 12 months?
Thank you everyone for your comments. No, the clause has not been litigated (to my knowledge), but litigation over tenancy agreement clauses is not that common. Also I would prefer my clauses to be so clear that litigation is inappropriate!
Brixtonia, I agree that granting three year terms might help that particular problem but I suspect not many people will want to sign up for three years, even with a break clause.
You have all been most helpful though. Thank you.
One problem with a three year agreement is that you will not get permission from most mortgage lenders to grant such a long fixed term. They often specify no more than 6 or 12 month terms.
That is very true David, yes, thank you for that. That indeed may be the real reason why there are so few terms longer than 12 months.