What are break clauses in Tenancy Agreements?
A break clause is a clause in a tenancy agreement that provides both tenant and landlord the opportunity to terminate the tenancy agreement early during the fixed-term (e.g. a 12 month contract gets terminated after 6 months). Essentially, either party can “break” the tenancy before the fixed end date, as long as the correct procedures are followed.
However, it’s important to note, even if the tenancy does include a break clause, the Housing Act 1988 prevents the court from awarding possession to a landlord until six months into the tenancy has passed from the beginning of the agreement, unless the landlord is using one of the seventeen statutory grounds for possession, in which case the landlord has rights to evict the tenant and should serve a Section 8 Notice. So, break clauses typically stipulate that they can only be enforced 6 months into the fixed term of a tenancy, no earlier!
Here is an example of a break clause (please do NOT use it without seeking legal advise, this may not be valid):
20 Mutual breaking clause
Any time after six months of the initial fixed term of this tenancy either party may invoke this break clause by providing a minimum of 60 days 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 nevertheless to any claim by either party against the other in respect of any breach of any of the terms and conditions of the agreement.
Serving notice to break the tenancy
The landlord is required to provide at least two months notice to the tenant if they wish to enforce the break clause by serving a Section 21 Notice. So for example, if the tenancy starts on 1st of January, the landlord should serve notice by 1st May (i.e. tenant should have received notice by then), which means the tenant should vacate on July 1st (6 months from when the tenancy began).
If the tenant wants to enforce the break clause, they must also give 2 months notice to the landlord by serving a written notice, known as a tenancy surrender notice. It’s also worth noting that if the tenancy wishes to end the tenancy on or after the fixed term, they only need to provide one months’ notice- that is their statutory right.
Why the break clause is used
Break clauses really are about flexibility for both tenant and landlord. They provide landlords/tenants the opportunity to break a tenancy if personal circumstances change. This could include scenarios such as relocating for work related purposes, changes financial circumstances, or even because the relationship between the tenant and landlord turned sour.
The reason I don’t use break clauses
I personally don’t use break clauses in my tenancy agreements, the reason being is that they don’t seem convincingly reliable (from what I’ve read and been told), which makes them kind of scary to me. Let me explain…
Assuming the landlord is relying on the break clause by serving their tenant with a notice- if the tenant refuses to vacate and remains in the property, the landlord will need to issue court proceedings so they can get a order possession from the Judge. The Judge will then look at the break clause to see if it is valid. If the Judge is not happy with the clause the landlord will not get possession.
Why wouldn’t the clause be valid? The break clause is one of those clauses that can be drafted and interpreted in many ways (apparently). If the clause is clearly drafted and equally fair to both parties, the landlord will have a better chance of getting possession. However, if the clause is poorly drafted and deemed unfair (e.g. if it is in the favour of the landlord), it is very unlikely that it will be enforceable.
To be fully enforceable in law, break clauses need careful drafting with a high degree of legal expertise – these agreements should be drafted by a solicitor or barrister, or obtained from a known reliable published source. But ultimately, every clause in a tenancy agreement needs to be deemed as “fair”
The preferred alternative to a break clause
Personally, I’d rather just issue my tenant with a 6 month tenancy agreement (that’s the minimum term allowed). That way, if the tenant or landlord wishes to end the tenancy, they can do without relying on a break clause. But also, and perhaps more crucially, if the tenant refuses to vacate after a valid possession notice (Section 21) is served by the landlord, the Judge should grant possession immediately, no questions ask, because the tenancy’s fixed term would have.
In the event that after the 6 months both parties are happy to continue the tenancy, then the tenancy can either roll onto a Periodic Tenancy or a new tenancy agreement can be issued.
Issuing a 6 month tenancy just seems much safer and reliable because there’s little margin for error in comparison.
Mutually terminating the tenancy early
If at any point during the fixed term both landlord and tenant agree to mutually terminate the tenancy (for whatever reason), whether there’s a break clause or not, the normal procedure is for the tenant to vacate all his/her possessions and hand back the keys.
In the event that the tenant wants to surrender the tenancy without the landlords agreement, the tenant will be contractually obliged to pay rent for the entire length of the fixed term. Similarly, if the landlord wants the tenant to vacate early while the tenant has no interest, the landlord cannot reposes the property early without grounds for eviction.
Here’s a blog post which covers many of the legal methods of terminating a tenancy.
Do you use break clauses?
Do you use a break clause in your tenancy? If so, I’d be interested to see what it says. Would you mind copy/pasting it? Also, has anyone ever enforced the break clause?