Fixed term tenancy - early termination

[vivimimi]

Hi - I’d be grateful for your guidance for our situation.

We signed a 24-month fixed term rental agreement on Aug’19 with expiry Aug’21. We are a family of 4 (with 2 teens boy & girl) and this is a 2 bedroom apartment. But we took it thinking that we will be fine to adjust. We soon realised that its increasingly difficult to manage with less rooms and bathrooms. We started looking for a house and after a long wait during the pandemic, we are now ready for exchange & completion in early July’20. The house needs work, I estimate we will be ready to move only in Oct’20. Hence we will be terminating 10 months early. We haven’t notified the agent yet (thinking of waiting until the completion on our new home). Our rent is £1250 pcm, Kingston,Surrey.

What is the best way to approach this? Are we stuffed???

Any guidance in this matter will help us immensely. Thank you.

Here is the clause in the rental agreement, there is no other break clause in the agreement:
-->
This is a fixed term tenancy agreement with no provision for either party to terminate the agreement before the expiration of the fixed term. Under exceptional circumstances, the Landlord may (but without any obligation), consider a request for the surrender of this tenancy as described below.

If the Tenant requests to surrender the tenancy prior to the end of the fixed term, and the Landlord agrees to the surrender, then the Tenant will be responsible for rent until the earlier of the expiry of the tenancy under this agreement and the date the Landlord or a new tenant takes possession of the Premises. The Tenant will also be responsible for any reasonable costs the Landlord incurs in effecting a surrender of the tenancy and finding a replacement tenant. The Landlord will advise of the actual costs at the time of the request, each case being considered on its own merits. As a general guideline, these costs may include (but not limited to):

• The letting fee of up to 11% + VAT (13.2%) of the rent from the date of early surrender until the original end date of the Tenancy,
• A proportion (being the number of months to be surrendered early as a percentage of the current fixed term) of the Landlord’s costs in sum of £144 (inc.) for an inventory clerk checking the new Tenant into the Property,
• A proportion (being the number of months to be surrendered early as a percentage of the current fixed term) of the Landlord’s costs in sum of £480 (inc.) being the cost of administering the new Tenancy, preparing the Tenancy Agreement, collating references, checking the new Tenant’s Right to Rent and registering the deposit with an approved Government scheme
• For the surrender and grant of a new tenancy on similar terms, the Landlord’s costs would be £300 (inc.) plus any associated inventory costs.

So you are a family of 4 living in a 2 bed flat? Do your teens share a bedroom?

In the very first instance I think you need to check if the contract is legal. You can sign anything but if it's not lawful it can't be upheld. Do you have any insurance policies which give you legal cover? If not either go to Citizens Advice or Shelter. You could also join Which for £9 per month and get legal help.

The costs mentioned may well not be legal as tenants are no longer allowed to be charged for fee and I can't believe they would be allowed to charge on exit if it's not legal to charge at the beginning of the tenancy.

I am a landlord and I don't think the EA or landlord should have rented you a two bed with boy/girl teens. For social housing you would be entitled to a bedroom each at that age and there are good reasons for that. If you didn't go out of your way at the time to reassure them that it would all be fine then I think they have to accept some responsibility in the property not being right for you (very much just my personal opinion and unlikely to be a point of law).

If the house you are looking to but is via an EA which also does lettings you might also be able to approach them for some guidance. I would still double check anything you're told but it might give you some pointers on if your contract is legal/enforceable.

• looking to buy

Thank you @Smallgoon and @TheTeenageYears. We have provisioned a bed in the living area.

@TheTeenageYears - how can I check if the contract is legal or not?

You might just find the landlord is willing to let you leave early. You would need to allow viewings so they can line up another tenant ASAP. I am a landlord and my last tenant got a new job in another area. They had lived in the property for over two years. We took the opportunity to have a new kitchen put in immediately after they left. I am sorry that your property is not suitable for your needs but surely you coups see that before you moved in? Tell the agent it's not working out and you would like to leave.

@vivimimi you could either read up on all the laws to do with an AST and then go through your own contract to see if there is anything in it that doesn't adhere to the law (I strongly suspect the fees they specifically mention for early termination in terms of finding a new tenant are not legal) or you can take it to Citizens Advice/Shelter for them to have a look at. It basically needs someone with the legal knowledge to go through it. Just because the EA are using it as a contract doesn't mean it's legal - there will be a huge number of people who would never double check and they are working on that being the case.

We were told by a letting agent that it is almost impossible to keep a deposit even if someone trashes your house. It's not true at all - when we had problems with a tenant and eventually got them out we presented documentation factually to the deposit scheme and it was all awarded to us. They actually ran out of deposit to award and told us how we could pursue rent arrears outside of the tenant deposit scheme system. It just highlights how some agents have absolutely no clue what they are doing. Anyone can be an EA in the U.K. and lot's of contracts won't be run by a qualified lawyer before they become the agency norm.

It is very likely to be legal to answer that point. Frankly I wouldn't argue that. All you can do is seek to surrender the tenancy under the terms outlined in the contract and see if the landlord is agreeable.

The charges outlined do not relate to the deposit

Got it, thank so much @TheTeenageYears.

@Mosaic123 you are a good landlord and I wish ours is too. Thank you.

I think you should expect some cost.
You signed the contract for 2 years. Usually there is a break clause, but you signed whatever was written.

I always feel uncomfortable that people want a legally watertight contract to protect them.....until they want to get out of it.....and then are suddenly keen to find ways to wriggle out.

Be reasonable. Say the situation sooner rather than later, giving them landlord a chance to look into alternatives. You are more likely to be released with low cost to yourself if the landlord has maximum notice and has plenty of time to show people round and find a new tenant. If you only tell them late in the day, you can expect less generosity towards you.

In the end though, long term tenancies giving you as tenant security of tenure, come at a cost of longer term commitment to rent.

Why did you want a 2yr fixed contact? Did you need it for school aplications or similar? If the landlord is approachable, explain what you want to do. He may be willing to get another tenant and your liabilities wouldnt be so high, but you need to be live to the fact that unless you can get the landlord to agree skmethjng else, and theres no reason s/he would, you are responsible for rent and bills till the end of the term.

Let the Agent/Landlord know as soon as possible as they're more likely to be amenable to letting you go early without incurring too many costs.

Thank you @Africa2go @Lightsabre @WombatChocolate

Actually our circumstance changed due to Covid. Here is the sequence and the long story.

Aug'19:

1. Me and daughter (age:16) took the rent. DH worked internationally and DS (age:12) lived with him. We planned to live like this for 2yrs, DD would go to Uni and then either I will move back with DH or vice versa. Hence the 2 yr rental agreement.

Jan-Feb'20:
2) DH and DS visited us for holiday for just 2 weeks. However during this time DD suffered an eye problem and was diagnosed with a rare eye condition by Ophthalmologist (we have evidence). Although no threat to her eyesight but needed extra care and regular visits to the clinic. DH got anxious and delayed his return to Mar'20.

Mar'20 - till date:
3) The pandemic hit and airports etc started getting closed. We panicked and thought to stay together is best for us. In fact now looking back, we think we did right to stay together. DH started WFH and I got my DS admitted to local school so that he doesn't miss on his studies (we are British btw).

Now we have decided to stay together. DH workplace have agreed to move him back to his home country UK. Hence we started looking for a bigger home. Now that the restrictions are lifted, we could see new properties. We surely will not move to new home until Oct'20 and surely will give the landlord plenty of time.

So you can see how sequence of events over last 6 months have impacted our long term plans.

If I was your landlord and you presented me with that long cobbled together rigmarole I would be less inclined to be understanding about you defaulting on your agreement than if you said " Sorry, the property is not working for us, we would like to leave on XXX". People who come up with long, convoluted arguments , excuses and reasons are usually being economical with the truth, ask any police officer .

If you give them enough time to find another tenant, are helpful over viewings and leave your property in excellent condition so that new tenants can move in then most landlords would be reasonable.

Yes, the reasons aren’t really relevant to the LL who is running a business and probably needs to pay his mortgage.

You signed the contract and now want to break it. It will be up to landlord if he wants to strictly enforce it or just partly enforce it and be more flexible. But know that having signed, your changed circumstances don’t exempt you from being committed to the terms of it.

All you can do is rely on and hope for some goodwill. A simple apology, as much noice as possible, willingness to let future tenants look round and asking if there can be some flexibility about end date are what you should mention. Do not assume you can avoid lots of the costs. Approach it as seeking the landlords goodwill. Expect to pay quite a lot. You can try to negotiate if they try to hold you to full 2 years or close to it, but you should recognise it’s you not them trying to end something you contracted to. It wouldn’t be unreasonable to hold you to it, especially if they struggle to get another tenant.

Bear in mind costs they will incur in finding a replacement tenant - substantial agent fees, cleaning and some kind of refreshing/decorating is almost always needed...possibly more than that like new carpets? These are all costs they wouldn’t have incurred if you had stayed for what you signed up for.....so expect to fund them to a large extent. Even if a new tenant is found quickly there are still substantial costs in changeover.

Some LLs will simply insist on the fulfilment of contract and refuse any flex. It is up to them.

Don’t bother with the long story....irrelevant. You don’t need to justify yourself, just be honest quickly and behave decently and acknowledge you are breaking contract and LL will now decide.

If this was one of my properties I would be agreeable to letting you terminate early but only once I had found another tenant. I would expect you to pay all costs associated though.

I wholeheartedly agree that communication with the landlord is really important. I just think it's also important to properly understand the law from an impartial source as opposed to taking the word (or details of the contract) from either the landlord or EA who currently have a vested interest. I can't believe a landlord can legally stipulate even proportionate costs relating to reletting to be paid on early exit when he can't change them at the beginning of a tenancy. It just makes me wonder what else within the contract might be breaking or stretching the law.

I agree with pp who said long and convoluted tales are often not true but we are living in exceptional times. Did the EA know your circumstances at the time - that the flat was for you and DD with DH and DS during holidays? If they did it's going to be a lot easier for them to believe this is a genuine change of circumstances and work with you.

Being reasonable and seeing it from both sides is the best way forward.

@MarieG10 I know it has nothing to do with the deposit. I was simply highlighting that EA's can and do get things wrong and unfortunately both landlords and tenants are often heavily reliant on them as the people who know best (because that is there job), when actually they don't. The in between person doesn't have the same level of vested interest as the tenant or landlord.

@WombatChocolate @viques @tarscout. Thank you all. Your inputs are valuable - what to do and what not to do.
Recently I had informed the EA that my family is living together now.

So I shall keep it simple - “Sorry, the property is not working for us, we would like to leave on XXX".

The only thing I can see if that as of July 1st a LL can’t charge an inventory fee so you should be ok there. However the charges around re- letting seem legal
Not a lawyer but I do need to be familiar with Tenancy agreements for my job.

& make sure you are really flexible about viewings (in this case its in YOUR interest) & lets hope to goodness there is no more lockdown

The costs mentioned may well not be legal as tenants are no longer allowed to be charged for fee and I can't believe they would be allowed to charge on exit if it's not legal to charge at the beginning of the tenancy

It is legal because the landlord isn't charging the tenant fees at the end of a tenancy, the tenant is compensating the landlord for their losses incurred as a result of the tenant breaking the contract. The landlord is having to pay the letting agent an extra set of fees/marketing costs that they wouldn't have had to pay if OP stayed until the end of their tenancy.

It's normal that if you want to break a contract you have to pay the other party's financial losses. Sorry. If you tell them in July as soon as you have exchanged contracts they should hopefully be able to find a new tenant by October so you don't have to pay any rental losses, just the fees. If you can find a replacement tenant before you give notice, the letting agent wouldn't be able to charge the 11% letting fee if they haven't marketed the property.

Thank you @goingoverground. We have budgeted for the fees that we have to pay c. £2 or 3k. I just want to avoid paying full rent till the remainder of contract, if they ask. In my case that’s £15000 (£1250x12 months).

@goingoverground are you saying I can avoid the 11% letting free of I find a tenant. So how does that work. I introduce a prospect to the agent and then they will do their indemnity checks etc or I have to do all that and give them a 100% clear checked tenant.
I can market on Openrooms etc. Am I allowed to market the property?

Potentially you might have to pay rent for the whole period if they advertise it and can't let it before the end of your tenancy agreement @vivimimi. They can't decide to leave the property empty and charge you rent though or renovate it or leave it empty to sell. If they don't start to market it before you leave, you might be able to argue that it is not your fault that they haven't relet it.

I am not sure about the legality of advertising the property without the landlord's permission although plenty of people do, especially in house shares. You can definitely do it by word of mouth. You could approach the landlord directly (the letting agent legally has to give you their address if you don't already have it in the contract), explain that you need to terminate the contract early because of family circumstances and could you try to find a replacement tenant, subject to all the usual references and you paying the costs to the landlord of the new tenancy (contract/inventory fees etc).

The 11% letting fee is the fee that the agent charges for finding a tenant, advertising the property/doing viewings etc. If they don't provide that service because you introduce a tenant, they can't charge that fee, the landlord doesn't have that loss, so you aren't liable to pay it.

The letting agent is the only party who profits from you terminating the contract early as they get to charge an extra set of fees so don't assume that they will be helpful in negotiating with the landlord to get permission for you to find a new tenant.

You'll have to pay full rent until someone else rents it and pay advertising costs etc. You are breaching a clear term of the contract and the landlord will suffer loss (i.e. unpaid rent) because of this loss. Unless you are leaving because of a problem with the property your change in circumstances is irrelevant.

Why didn't you negotiate a break clause after a certain period?