And how to deal with them
There is a lot of discussion and complaint about the position of tenants who want to stay long-term in their property but are forced to leave. However, there are also problems for tenants who want to leave their tenancy early.
I advised a couple the other day who were in this position (under my tenant advice service). Their story illustrates the problems that people face, and how through ignorance they often make their position worse.
Signing the tenancy
This particular couple knew that they were going to be buying their own house shortly and knew therefore that they would want to leave their tenancy early. They told this to their landlord (who they were dealing with direct – there was no letting agent involved) at the time their tenancy was being renewed.
The landlord agreed vaguely that leaving early might be possible if they were able to find replacement tenants. However, no promises were made.
What the tenants should have done
There are three things they could have done:
1. If they knew for sure, for example, that they were only going to be staying for nine months, they could have asked for a nine-month fixed term. There is no law which says a tenancy has GOT to be either six months or a year. It can be for any time the parties agree on.
2. Or they could have asked for the tenancy agreement to contain a break clause. This is very common in fixed terms over six months. Had they asked the landlords for this it is likely that the landlord would have agreed. But they didn’t.
3. Or they could have asked if the tenancy could just be allowed to run on, as a ‘periodic’ tenancy. This is where, after the end of a fixed term, the tenancy runs on from month to month. There is no need to do anything to make this happen – it will happen automatically under s5 of the Housing Act 1988. This would have given them maximum flexibility, as they would have been able to end the tenancy upon giving a months notice. Had the landlords refused specifically to agree to this, the tenants could have just failed to sign the new tenancy agreement.
Giving landlords notice to leave
As my tenants had not done any of these things, they gave their notice to end their 12 months fixed term tenancy in circumstances where they did not have any legal right to do this.
Now apparently the landlords had been fairly pleasant about it and said they would look around for alternative tenants, but it seems that they did not hurry about this. And from their point of view – why should they? Their tenants were legally liable to pay rent for the rest of the term.
The only legal authority I know for this situation is the 2006 case of Reichman and Another -v- Beveridge which held that the landlord has no duty to mitigate his losses in this situation and is entitled to look to the tenants to pay the rent.
In fact, this is what the landlords here did. They told the tenants that until a replacement was found they would expect them to pay the rent.
By the time they sought my advice my couple had actually handed back the keys and moved out. They told me that they had behaved in what they thought was the proper way and indeed had spent a considerable amount of money getting the property cleaned and so on. They were a bit upset about what they considered to be the landlord’s ‘unreasonable attitude’.
However, as I had to tell them, the landlord was under no legal obligation to end the tenancy early and basically had them over a barrel. As can be seen from this post, simply handing the keys back does not in itself end the tenancy.
What the tenants should have done.
They should have first mentally put themselves in the landlord’s position. Most landlords just want a quiet life with their rent being paid regularly. They are generally willing to be reasonable but not if it means they are going to lose money.
So they are not going to waive rent until the end of the fixed term unless either they have to (i.e. by tenants activating a break clause) or unless they have some incentive to do so.
What I generally advise tenants in this situation to do, is to try to find replacement tenants themselves. Assuming the replacement tenants pass credit referencing, the landlords will normally be happy to re-let to them – as they will not have any voids.
The other suggestion I made was to pay less than the full rent for the end of the fixed term but to pay it all up front.
So if in May a tenancy is due to end in September, the landlord is entitled to get his rent in May, June, July, August and September. So if the tenants offer to pay the rent for May, June and July up front, the landlord may be willing to agree to this. Provided the money is paid, this would create a binding agreement – because the landlord is getting something beneficial he would not otherwise have had.
Although tenants should protect their position by using the words ‘in full and final settlement’ in their letter or email. Then if the landlords accept the up-front payment they will be bound by this.
Many people also write ‘in full and final settlement of all liabilities’ or similar on the cheque that they send. Then, if the landlord cashes it, he is bound by that agreement.
There is often a lot that tenants can do to protect themselves in this situation. However, you need to work with the law rather than just expect the landlords to be nice to you.
These tenant’s biggest mistake, however, was to delay taking legal advice. By the time they came to me, there was very little I could say to help them.