Mutual Break Clause

[green2807]

Please could someone give us some advice. We have been renting a house since 2010. We took out a conract in 2010-11 then another in 2011-2013 and we are now in our current contract which we took out on 28/01/13 - 27/01/15.

We are currently in the process of buying our first home and hope to complete at the end of sept 14.

We contacted our letting agent to advise of this and he sent us the following email:

Further to our conversation, your tenancy does not expire until the 27th January 2015 and as such you are responsible for both the property and the rent up until that date. If you wanted to proceed we would need to speak to your landlord and providing they are in agreement and should you wish to proceed with the early release, the provisions for this are detailed below and you will only be released once a new tenant takes occupation:-

Should you require any early release, there is a penalty charge for breaking the tenancy agreement. You would be responsible for the rent and the property up to the point a new tenant takes occupation and the penalty charge is 60% + VAT of a month’s rent & £150.00 for the new tenancy agreements for the replacement tenant. Should we not be able to find a new tenant, please be aware that you will not be released from the contract and this will continue until expiry on the 19th September 2014 .

Clause in the tenancy agreement

3 The Tenants obligations

These clauses set out what is expected of the tenant during the tenancy. If any major obligation is broken the landlord or the landlords agent may be able to deduct money from the deposit at the end of the tenancy, claim damages or ask the court to grant possession.

3 ( Administration and other costs

To pay fair proportion of th administration costs in setting up this tenancy as follows:

(vii)

Any Early release administration costs not paid by any assignee if the Landlord agrees to an assignment which are incurred by the Landlords Agent following the early ending of the Tenancy by the Tenant will be deducted from the Deposit. Early release penalty charges are 60% + VAT of a months rent & £150.00 + VAT for new contracts for replacement tenant to be paid by tenant requiring early release from this agreement.

Please can you confirm by return that you agree with the above and I can arrange for the property to be marketed on your behalf?

We are a little confused as we thought we would be covered by our contract under the 'Additional Clauses' section which states:

3 (0) 5 Mutual Break Clause

Any time after Twelve months of the initial fixed term of this tenancy (or after a similar period following a fixed term extension to the original tenancy) either party may invoke this break clause by providing a minimun of one months written notice to the other (such notice to expire on the last day of a rental period of the tenancy). At the end of such notice the tenancy shall end and all obligations and responsibilities shall cease; subject nethertheless to any claim by either party against the other in respect of any breach of any of the terms and conditions of the agreement.

We're not sure where we stand and would really appreciate some advice - do we have to pay these early release penalty charges?

Can we invoke our mutual break clause and how/when would we do this? we pay our rent on the 1st of every month and are hoping to leave on the 30th September.

[nickincash]

This break clause seems to be unambiguous. Your current tenancy has been in effect more than 12 months so you only need give one month's notice.

I think you should write a letter (not email, text etc.) stating that you are invoking the break clause and post it or deliver it by hand to the address stated on the tenancy agreement for service of notices (probably the agent). Keep a copy and be able to prove that you sent it. This will end the tenancy on the last day of whichever month you specify (eg 30 September).

Don't pay any early release charge but make sure you leave by 30 September and hand in the keys on or before that date.

[Lifes a game]

Ask them, why out of 4 years of renting you're unable to give one months notice. The initial fixed term finished a long time ago.

Do what nickincash says, get them to sign that they've received the notice and act upon it. Don't pay any charges. Another thing to check is if your deposit is protected for the full amount and protected no later than 1 month after you've signed each contract because the payout can be 3x your deposit. My last landlord thought he was cleaver by raising my rent and getting me to sign a new contract. The poor sod didn't top up the extra £50 so when we came to part ways on unfavourable terms I reminded him that I hadn't received my new deposit protection, a quick free trip to the solicitor to write a letter informing of action and that's all it took to get back a few months worth of rent.

[green2807]

Thanks, much appreciated. We pay £1015 per month so 60% of this plus VAT and £150 was a bit of a shock! They said its to advertise the property and draw up new contracts and that this is not the landlords responsibility and is a penalty on us :/

We do have deposit protection.

[hemichromis]

Your current and valid contract seems to say you need only give one months notice.

That contract is valid as it is signed by both parties.

The other item they sent you is there own wish list, you may as well send them one back saying the owe you your deposit plus 1000000% interest and ask them to sign it!

Give them notice by recorded mail or by hand if possible.

[xela57]

Presumably you have a solicitor on hand as you are buying a house. I suggest you speak to them about this issue.

Especially if you are intending to serve notice before you have exchanged!

Good luck and keep us posted!

[gadget]

The letting agent clearly doesn't know what they're talking about. You are not liable for rent until a new tenant is found as you are within the term of the break clause.

As to their term about early release penalty charges: that's pretty outrageous. Fortunately i don't think it applies and anyway it's almost certainly unenforceable as an "unfair term". Frankly though if i'd seen that in a tenancy agreement i'd have walked away: even if its unenforceable it marks the agents as nasty pieces of work...

Edited August 24, 2014 by gadget

[Flopsy]

I think you need to take some advice on this as I am guessing that the agent is arguing that every time you sign a new contract it then creates a new "12 month" period that you cannot give notice in without having to pay a penalty?

It's not Foxton's it is? Just asking as they attempted to put a similar clause in a contract we signed with them. I pointed out that the LL would need to give us 2 months notice (and not one as they insisted) if they wanted to get rid of us.

Something that our Lawyer pointed out when I asked about the contract was that Foxton's could not get away with getting us to "sign our rights away" by insisting in the lease that the LL needs only to give one month.

If you understood the contract clause as being one months notice after the first (they say "initial) 12 months and that each subsequent 12 months was not going back to the start again then you need to argue this. Our Lawyer always says it is the intent and understanding of the contract terms signed and how / what you understood them as being at the time you signed them. I always argue on these terms and have done so in the small claims court when needed.

Edited August 27, 2014 by Flopsy

[Damocles]

Exercising the break clause does not incur any release charges as the tenant is not being released.