Tenancy Agreements 33 days of tips – day 25 – Ending

Clauses about ending the tenancy

You need to be very careful here and bear in mind that the statutory provisions for ending tenancies will override any private agreement you may reach with your tenants.  For example:-

Any clauses saying that the tenants must give notice (one, two months etc) if they want to leave at the end of the fixed term will be void, as tenants have the legal right to leave at the end of the fixed term without giving any notice at all.  Sorry, but its the law.  I wrote a blog post about this here.

After the fixed term has ended, if the tenant stays on, it will be on a periodic basis.  Any clause which requires the tenant to give a longer notice period than that required under the general law (28 days for weekly, 1 month for monthly, quarterly for quarterly etc, all ending at the end of a period of the tenancy) will also be void

Then there is the forfeiture clause.  This is that clause in tenancy agreements which talks about ‘re-entering’ the property if the tenant is in arrears of rent of 14, 21 days or whatever.   This is a real hangover from the past.  In the bad old days, landlords really did have the right to physically re-enter the property and turn the tenants out (and also take their stuff to pay the unpaid rent) – as commercial landlords can still do, in some circumstances.

Now ‘re-entry’ must be done by way of bringing a court claim for possession.  But forfeiture is specifically forbidden by the Housing Act 1988 – the one which sets up ASTs.  So why leave this clause in?  Well, it is actually really important.  It is necessary to have something like this to enable you to bring a claim under the ‘grounds’ in the Housing Act 1988 during the fixed term.  All forfeiture clauses nowadays refer also to the Housing Act grounds for possession.

It also possible that your AST may one day revert to a common law tenancy – for example, if the tenant sublets it, or perhaps if it is assigned to a limited company.  In which case you *can* bring possession proceedings based on forfeiture.

The Office of Fair Trading made it clear, however (in their guidance on unfair terms) that the clause must not be misleading, and must make it clear that the tenant can only be evicted after the landlord has obtained a court order for possession.  And also that the tenant retains his rights under the Protection from Eviction Act 1977.

Break clauses are the other ‘ending’ clause that we need to mention here.  Not all tenancies have one.  It is basically a clause which says that if a certain procedure is followed (generally two months notice in writing), the tenant or the landlord is allowed to end (or ‘break’) the tenancy early.

It is important that, if you have a break clause, it can be used by both the landlord and the tenant.  Some agreements have two clauses, one for each.  That is OK, so long as the one the tenant uses is not more onerous.  They should be the same.

You should also make it very clear what people have to do to break the tenancy.   I have seen some that were so convoluted that it was practically impossible to comply with them.

Note that landlords will also need to serve a section 21 notice (whether this is mentioned in the tenancy agreement or not).  Following the procedure in the break clause ends the tenancy.  The s21 notice will entitle you to bring proceedings for possession if the tenant does not leave.  Both are necessary.

Bear in mind also that the break clause will just end the fixed term – the tenancy will then continue as a periodic tenancy in the usual way.  So if your tenant stays on in the property he is not doing anything illegal.  He still has a tenancy.

Summing it up in your tenancy agreement

I think it is a good idea to summarise somewhere how the tenancy can be ended.  In my tenancy agreements, I generally do this at the start of the tenancy, before the main terms and conditions begin.  Then everyone knows where they stand.

Just for the record, they are:

• Tenant moving out at the end of the fixed term
• Tenant moving out as a result of the landlord’s notice (normally s21)
• Tenant moving out after giving his own notice to quit (only possible after the fixed term has ended)
• Landlord and tenant agreeing that the tenant may ‘surrender’ the tenancy early
• The parties signing a new tenancy agreement (which automatically ends the preceding one), and
• A court order for possession

One of joint tenants wanting to leave

This can be a problem with joint tenants, and it you think it is likely it may be best to give tenants individual agreements for their own room (as discussed on Day 5).  Basically, there are three ways you can deal with it:

• Agree to allow a new tenancy agreement for the remainder of the term with a replacement tenant (approved by you) and the remaining tenants – assuming of course that the remaining tenants will agree to sign it.  This is the most complex solution as you will also have to deal with deposit issues.

• Refuse to allow a new tenancy agreement but say that the tenants can take in a lodger to cover the outgoing tenant’s share of the rent (with the outgoing tenant still remaining liable under the tenancy agreement)

• Refuse to agree to anything and say you will hold all the tenants liable whether they are living there or not.

It depends on the circumstances of the situation which you agree, but perhaps option 2 is the simplest.  If the lodger proves reliable, he can then sign up as a tenant if the tenancy is renewed at the end of the fixed term.

I discuss this all in more detail in my Changing Tenants kit plus there is a lot of information about lodgers on my (free) Lodger Landlord web-site.