Home Business Landlord Housing Do I Need a Break Clause in a Tenancy Agreement?

Do I Need a Break Clause in a Tenancy Agreement?

A break clause permits you as the landlord or your tenant to end a tenancy agreement within the arranged fixed term period, bringing the tenancy agreement to an early end.
A break clause generally carries a number of conditions that must be fulfilled before the tenancy agreement can be brought to an early end, such as ensuring that the tenant is not in rent arrears and that the correct length of notice has been provided.

The pros of having a break clause in a tenancy agreement

The main benefit to both the landlord and the tenant of having a break clause in a tenancy agreement is the factor of flexibility.

A tenant can enter into a tenancy agreement knowing that should your circumstances change, for instance, redundancy or relocation, they are not tied to the tenancy and therefore not obligated to pay rent for the full fixed term.

For a landlord, there are certain limits on this flexibility as you may not activate a break clause during the first six months of the tenancy. However, where personal circumstances change unexpectedly or where you are unhappy with the tenant for any reason, the inclusion of a break clause in the tenancy agreement can offer a way out of the situation before the end of the agreed fixed term.

Where a tenant activates a break clause but does not vacate the property by the end of the notice period, you are not required to obtain a possession order through the courts to evict the tenant.

The cons of having a break clause in a tenancy agreement

Although this may be seen as a benefit to the tenant, as a landlord the fact that you can’t activate the break clause during the first six months of the tenancy may prove to be a disadvantage. This condition of using a break clause, however, doesn’t apply where you can prove that the tenant has breached any conditions of the tenancy agreement and given you grounds for eviction, such as:

  • the tenant falls into rent arrears
  • the tenant prevents access to the property to carry out repairs
  • the tenant is guilty of anti-social behaviour
  • the tenant has allowed the property or included furniture and fittings to deteriorate in condition

In this situation, you do not need to activate the break clause to begin eviction proceedings.

Again, whilst a benefit to the tenant, the fact that the tenant does not require your agreement to activate the break clause to end the tenancy may be seen as a disadvantage for a landlord, as it removes a level of control over the decision on your part.

Although including a break clause in a tenancy agreement may make renting your property more attractive to a tenant, it does bring a level of insecurity to the arrangement for you as a landlord. You can’t guarantee that your tenant will remain in your property for the entire fixed term and hence there is a level of unpredictability about your income for that period.

Although legally binding, the break clause, on its own, can’t enforce an eviction. Where you activate the break clause, give notice to your tenant, and that tenant then refuses to leave your property, you are required to seek a possession order through the courts. This obviously takes time and incurs costs.

Activating the break clause

Should you wish to activate the break clause, you must provide the tenant with at least two months’ notice in the form of a Section 21 notice. You must also ensure that you adhere to all the related conditions stated in the tenancy agreement.

If you fail to follow the correct procedures, your tenant may refuse to leave the property and even take legal action against you. Where your tenant refuses to leave, the only legal course of action you can take is to seek a possession order through the courts.
If your tenant activates the break clause, they must provide you with the amount of notice stated in the break clause and fulfil any related conditions. Their notice must be in written form, either hand delivered or posted to you, unless your tenancy agreement states that an emailed notice is acceptable.

What should be included in a break clause?

The terms and conditions of the break clause may vary depending on the details of the tenancy but generally it should include:

  • the form that notice should take (written or emailed) and how it will be served to the other party (by hand, post or email)
  • how much notice must be given by either party
  • conditions that may allow or prevent the activation of the break clause, such as the tenant falling into rent arrears or returning the property to the condition it was in when the tenancy began

Joint tenancy

Where there are joint tenants listed in the tenancy agreement, they must all agree to activate the break clause. Where they can’t come to an agreement, the break clause can’t be used to end the tenancy.

Where one joint tenant wishes to leave the property, but the others wish to continue the tenancy, it may be necessary to negotiate a new tenancy agreement. Alternatively, you may prefer that the remaining joint tenants find someone to replace the tenant who has left.

Where a joint tenant leaves without notifying you, they will likely be required to pay rent for the remainder of the fixed term.

Sub-tenancy

Where either you or the tenant activate the break clause to end a tenancy agreement during the fixed term, any related sub-tenancy will also be cancelled.

For instance, where a tenant rents a property from you and, within the conditions of the tenancy agreement, they sub-let part of the property to another person, activation of the break clause will mean that both the original tenant and the sub-letting tenant must leave at the end of the notice period.

How is a break clause different from a forfeiture clause?

While a break clause can be activated by either the landlord or the tenant to bring an end to a tenancy agreement, a forfeiture clause can only be activated by the landlord.

A forfeiture clause is used where a tenant has broken certain conditions of the tenancy agreement, such as barring access to the property to carry out repairs.

Why take legal advice when drafting your tenancy agreement?

A tenancy agreement is a legally binding consumer contract, providing rights to both the landlord and the tenant, and also stating the obligations of both parties. A break clause, as part of the tenancy agreement, must also be seen to comply with consumer protection law. It can’t include unfair terms or in any way lead to either party being discriminated against.
As such, a break clause must be carefully worded to ensure that it not only meets the above requirements but is also legally enforceable.

Where a break clause is not thought through and the resulting wording is vague, this can lead to misinterpretation, disagreements, and the possible added expense of court proceedings.

Take specialist legal advice to ensure that should you choose to add a break clause to a tenancy agreement, it is worded professionally and correctly.

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