I have advised two tenants in the past two weeks both of whom have essentially the same problem. The break clause in their tenancy agreement did not work in the way that they assumed it would.
In neither case was the precise workings of the clause explained to the tenants.
Let’s take a look at them.
Break clause number 1
Here the tenant had a 12-month tenancy. The break clause read as follows:
If the tenant wishes to end the tenancy prior to or upon the expiry of its fixed term, then the tenant may give the Landlord no less than one calendar month’s notice in writing to be served in person or sent by 1st class mail stating that he/she wishes to leave the property, provided always that such notice can only expire at the end of the seventh month of this tenancy or at the end of the fixed term of this
The tenant assumed that he could break the tenancy at any time during the second half of the tenancy. So he was shocked to be told after he had given his notice, that this could only be done at one point in the tenancy – at the end of month six to expire at the end of month seven.
As it was now after the sixth month, the agents informed him that he had lost his opportunity to end the tenancy early and would have to stay there until the end of the fixed term.
Break clause number 2
Here the tenant negotiated what he thought was a 12-month break clause in a 3 year fixed term. He told the agents that he wanted to be able to do this as there was a rent increase after the end of the first year and he wanted to be able to end the tenancy then in case he was unable at that time to afford the new rent.
However the break clause in the tenancy agreement he actually signed read as follows:
Any time after twelve months of the initial fixed term of this tenancy either party may exercise two months written notice, at the end of the first twelve months or thereafter, to the other. At the end of such notice the tenancy shall end and all obligations and responsibilities shall cease; subject nevertheless to any claim by either party against the other in respect of any breach of any of the terms and conditions of the agreement.
Which is in effect a 14-month break clause rather than a 12 month one. This has put the tenant into all sorts of difficulties as he needs to move now for his work but cannot afford to pay two rents.
Tenant remedies for unfairness
It is arguable that in both of these cases the tenant is at fault as they should have read the tenancy agreement properly. However, most non-lawyers find contact terms difficult and in both these cases, the tenants trusted the agents to add a clause as agreed.
Indeed it is because tenants (who are treated as consumers) don’t normally read contractual documents that we have the unfair terms regulations (now part of the Consumer Rights Act 2015).
So do these tenants have any redress under the consumer legislation?
The Unfair Terms rules
These are there to protect consumers from clauses which are unfair or unfairly take away tenants rights. The available remedies though do not help either of my two tenants.
The remedy for an unfair term under the unfair terms rules is to make the term unenforceable. Which is good if the term is, say, imposing a harsh penalty clause or unreasonable conditions on the use of the property.
However, in the case of an unfair break clause, this is not what the tenants want. Making the clause unenforceable would just make things worse. What they want is a break clause worded as they had agreed with the agents.
Sadly though, the unfair terms rules do not provide for an offending clause to be amended in this way. Although this is in essence what both my tenants hoped they would be entitled to
If it had been a case of ambiguity, there is clause 60(1) which says
If a term in a consumer contract, or a consumer notice, could have different meanings, the meaning that is most favourable to the consumer is to prevail.
However, I think both the clauses (when you look at them properly) are fairly clear so this won’t help them either.
The other right tenants have under the Consumer Rights Act 2015 is to ‘unwind’ (or end) the tenancy during the first three months if the landlord or agent have acted unfairly. If this is done during the first month, the tenant can also recover all payments made.
I think both agents have acted unfairly. Both of the clauses which actually appeared in the tenancy were significantly different from the clauses the tenants expected. However, in both cases, (and understandably) the tenants did not find out about the problem until after the three month period for unwinding the tenancy was over.
So that rule, again, does not help them.
The only course of action that I can see is available to them is to put in a complaint to the agents Property Redress Scheme. In both cases, the agent had used a clause which was different from that discussed and agreed with the tenant. So it is arguable that this is unfair conduct.
For example, even if the agents were unable to use a clause worded as requested by the tenant because of the terms of their agent’s agreement with their landlord (and remember it is the landlord who is the agent’s client, NOT the tenants) – they should have explained this to the tenants.
Not allow them to continue under a misapprehension.
Have any other tenants experienced similar problems and if so were they able to resolve them?