I personally don’t have break clauses in my Tenancy Agreements, and I’ll tell you why, just after I’ve covered the basics…
What are break clauses in Tenancy Agreements?
A Break clause is a clause in tenancy agreements provide an opportunity for the tenant and/or the landlord to give notice (typically 2 months notice) during the fixed-term of the tenancy to end the tenancy early. Essentially, either party can “break” the tenancy before the 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.
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.
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 on April 1st, which means the tenant should vacate on June 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 (not a Section 21) after 6 months into the tenancy. The tenant should serve a written document with signature, surrendering the tenancy.
Please note, the correct party should receive the notice before or on the day of those dates.
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, or even because the relationship between the tenant and landlord turned sour.
The reason I don’t use break clauses
As mentioned, I 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 that the landlord has enforced the break clause by serving the tenant notice after 6 months into a 12 tenancy agreement. If the tenant stays in the property after the expiry, the landlord will need to issue Court proceedings and ask a Judge to order possession. 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.
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 valid. Unfortunately, when the landlord has got to this stage they will have incurred a Court fee of £175 and possible Solicitors costs.
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.
The preferred alternative to a break clause
Personally, I’d rather just issue my tenant with a 6 month tenancy agreement. That way, even if the tenant fails to vacate after 6 months, the Judge should give me possession immediately because the tenancy has expired, no questions asked.
If after the 6 months tenancy 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.
Surrendering a Tenancy
If a tenancy agreement does not contain a break clause, but both landlord and tenant want to break the tenancy earlier than the fixed date, then they can both surrender the tenancy. This can just be a written document that states both parties agree to terminate the tenancy early, with both parties signatures.
If the landlord does not agree to the surrender, the tenant will be contractually obliged to pay rent for the entire length of the fixed term. If it is the landlord wishing to have the property back, the tenant is entitled to remain in “quiet enjoyment” of the property and the landlord is obliged to follow the statutory termination provisions at the end of the term.
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?