Private tenants wanting to end their tenancy early should look at whether there is a break clause within their tenancy agreement. This also applies to landlords looking to bring the tenancy to an end before the agreed duration.
What is a break clause?
A break clause in tenancy agreements for private housing sector tenants refers to, within this context, a contractual provision set out under an assured shorthold tenancy agreement that permits one or either party to bring that agreement to an end prior to expiry of the fixed term.
Although a shorthold tenancy agreement can run on what’s known as a contractual periodic basis, ie; from week to week or month to month, typically these types of short-term agreement will be set for a fixed term from the outset.
In these circumstances, save except where agreement can be reached with the landlord, if a tenant decides to move out early, they will still be contractually responsible for paying the rent for the entirety of the fixed term. This type of agreement also means that a landlord cannot ask a tenant to leave until expiry of that term.
Where the agreement contains a break clause, however, this will allow one or either party to terminate the fixed term agreement, usually on written notice, without further consequence or contractual responsibility. Where the break clause applies to both parties, neither the landlord nor the tenant will be locked into the agreement for the full term.
Why would a break clause be used?
Historically, assured shorthold tenancy agreements have typically run for a period of between six to twelve months. Accordingly, these types of short-term agreement would rarely contain a break clause, given the time scales involved.
However, the presence of a break clause in tenancy agreements for private residential tenants is no longer that uncommon, in particular where the fixed term of the tenancy is for more than eighteen months to two years.
Furthermore, many landlords are beginning to see the benefits of longer assured shorthold agreements, not least in that this can provide greater certainty on rental income, minimises periods when the property is vacant and avoids the fees and hassle of unnecessary renewals or finding new tenants.
That said, landlords often still require some flexibility and freedom within this to recover possession of their property if they need to. By including a break clause within a longer tenancy, this allows for any potential change in circumstances of either the tenant or the landlord.
What does a break clause look like?
A break clause should specify at what stage during the fixed term either you or your landlord can bring the fixed term agreement to an end upon certain conditions applying. It should also set out the form and length of the notice required to end the tenancy by either party, typically by serving written notice.
Set out below are examples of two different types of break clause, with different conditions and notice periods:
Tenant’s rolling break clause
“Subject to the tenant not being permitted to serve notice within the first 3 months of the tenancy, the tenant may end this tenancy before the tenancy end date specified in clause x by giving the landlord at least 3 months’ notice in writing.”
This break clause means that the tenant can give the landlord three months’ notice in writing to end the tenancy early, but that s/he cannot give notice during the first three months of the tenancy. This means that the earliest a tenant will be able to end the tenancy is after the first six months of the term.
This clause reflects that the circumstances of a tenant might change unexpectedly, for example, because he or she has to move out of the area for work. The three months’ notice requirement also gives the landlord sufficient time to find a replacement tenant, whilst at the same time ensuring s/he continues to receive a rental income.
Landlord’s one-off break clause
“The landlord may end this tenancy on the date which is 6 months after the start of the tenancy by giving the tenant at least 2 months’ notice in writing.”
This break clause gives the landlord a one-off chance to end the fixed term tenancy at six months by giving the tenant at least two months’ written notice. This would enable the landlord to recover possession after the first six months, such that the first few months of the tenancy can serve as a probationary period.
If exercised, provided the landlord serves at least two months’ written notice, s/he can ask the tenant to leave the property on the date which falls six months after the start of the tenancy. However, where the break clause is not exercised within the strict timeframe, this right to end the tenancy early falls away.
What are the risks involved in agreeing to a break clause?
If you are asked to sign an assured shorthold tenancy agreement that contains a break clause in favour of your landlord, you should always give this careful consideration, not least where you are looking for a relatively long-term living arrangement.
The presence of a break clause could mean that, for example, half way through your tenancy agreement, or at the stage at which the break clause takes effect, you are faced with the prospect of being asked to leave.
For many tenants, this uncertainty and lack of stability may not be something they are willing to agree to. It can leave tenants feeling insecure and that their house is not their home.
Having agreed to this type of provision, many tenants can also feel disempowered to make any complaints that may arise during the course of the tenancy and unable to plan for their future.
That said, prior to entering into a tenancy agreement that contains a break clause, it may be possible to negotiate different contractual terms, for example, perhaps a marginally shorter fixed term period albeit with security of tenure for the entire period.
Before signing any agreement you should take the time to read through it carefully and to satisfy yourself that you are happy with the content. If you have any concerns, then you should ask questions or seek independent advice.
In particular, for information on how a break clause in tenancy agreements for private housing sector tenants can affect you, you should seek expert legal advice.
Will I be evicted if my landlord exercises a break clause against me?
If you sign a tenancy agreement that contains a break clause in favour of your landlord, there is a possibility that s/he may choose to exercise that clause and serve you with notice prior to expiry of the fixed term.
Provided that your landlord correctly serves you with notice in accordance with the provisions of the break clause, and any other conditions apply, on the face of it they will be entitled to regain possession of the property.
The exercise of a break clause by your landlord, however, does not affect your right not to be evicted without a court order. Further, any break notice served on you will also need to comply with the requirements of section 21 of the Housing Act 1988 to enable them to seek possession through the courts
In many cases, however, this will simply buy you some more time rather than any reprieve. So long as the break clause strikes a fair balance between both you and your landlord, then the court is likely to grant an order for possession.
Should I seek legal advice if I am asked to agree to a break clause?
If you are unsure about the effect of any break clause, or indeed any other provision contained with a tenancy agreement that you are being asked to sign, you should seek expert legal advice.
In the event that any agreement contains clauses that you feel are unfair, or you are otherwise unhappy with, your legal adviser may be able to broker a much better deal on your behalf.
Ultimately, although many landlords will use a standard form agreement, these are contracts that can, with agreement from both sides, be tailored to suit the needs of the parties. As such, your prospective landlord may be more than willing to agree to different, more favourable terms, offering you greater protection and security so as to ensure they engage you as their future tenant.
Equally, you may welcome the flexibility of a break clause, for example, if you are unsure about whether you will want to stay in the property long-term, and want to add this into any agreement. Again your legal adviser may be able to negotiate an additional clause within your tenancy.
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law and should not be treated as such.
Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission.
Before acting on any of the information contained herein, expert legal advice should be sought.