The Buzzmove Guide to Break Clauses

The Buzzmove Guide to Break Clauses

Renters > The Buzzmove Guide to Break Clauses

Whether you’re about to sign a new contract or looking to end your existing lease, you may have spotted a Break Clause nestled somewhere in your tenancy agreement.

If you’re one of the UK’s estimated 17 million renters it’s likely you’ve come across this term before, but most would be pressed explaining exactly how they work, with understanding often lost in legal translation.

To help ease this confusion and make sure you get the best protection from your lease, Buzzmove have put together an easy to use guide to so you can wave goodbye to the jargon and navigate your agreement like a pro.

Firstly, what exactly is a Break Clause?

To put it simply, a Break Clause may exist in a Residential Tenancy Agreement to allow the tenant or landlord to end the lease early, provided the correct conditions are met. They provide a date or period when the lease can be terminated by either party, given that an initial fixed period of tenancy is undertaken.

So, in a 12-month Tenancy Agreement a Break Clause could exist which allows either party to terminate the lease after 6 months, as long as written notice is given two months in advance and all conditions are complied with. Meaning as a tenant you would be tied into the lease for the first 6 months with the right to exercise the break clause after this period, providing both security and flexibility in one agreement.

These can exist as a fixed-date break clause, meaning the right to break lease arises on one or more specific dates, or as a rolling break clause, in which a lease can be terminated at any time during the term, i.e. over a period of time and not just one specific date.  Therefore, it’s important to make a note of the break date and notice period ahead of time, so you can review your options before the notice period begins.

What are the advantages of a break clause?

The main selling point of a break clause for a tenant is that it allows the flexibility of ending a lease early whilst also providing the security of a long-term agreement. This leaves an opening for a speedier exit if anything is to happen, whether that be needing to relocate for work or a sudden change in financial situation.

In addition, it may be the case that a break clause date is linked to the rent review date, allowing an ‘out’ if the landlord chooses to raise the rent to more than what is comfortable.  This is great in ensuring you don’t pay more than you can, however could be a risky if you’re unable to find a new place within the notice period.

And the drawbacks?

The main drawback of Break Clauses it that they can only be exercised if certain conditions are met, meaning even the smallest breach in criteria could stop the lease from being ended early.  These conditions can include rent being paid up to the break date, or vacant possession of the property being given. This is mainly concerning for those with fixed date clauses, as it may jeopardise the one chance to exercise the break clause and mean the tenancy agreement must remain for its entire lease.

It’s also important to bear in mind, that as a tenant, once a Break Clause is exercised it cannot be withdrawn (without the agreement of the landlord to do so), meaning they require 100% certainty if you want to leave an agreement. If you wish to reverse exercising the break clause (i.e. remain in the property) both the you and the landlord must be in mutual agreement to not obey the notice. It will then be deemed that the grant of a new lease can be given, which would take effect from the expiry date of the break notice.  However, it must be emphasized that there is no guarantee of this agreement being reached or that a new lease would be granted, so it is paramount that a break clause is seen as a one-time, absolute decision.

Finally, and most obviously, if a tenancy agreement contains a break clause this also means that the landlord can end the agreement early if they wish to do so.  Despite having to provide the tenant obvious notice, this does mean that you could be searching for a new place earlier than expected.  If this idea just brought you out in a cold sweat, don’t despair! This eventuality is usually very unlikely as it poses risks to the landlord and their income stream.  If they cannot find replacements tenants during the notice period they could be left with an empty property and no rent coming in until they do so, an extremely daunting prospect for them and often the reason for excluding Break Clauses in their agreements all together.

Our top tips when wanting to exercise a Break Clause

So, now that you have a better understanding of exactly what a Break Clause is and how it could affect your Tenancy Agreement, here are some key points to bear in mind when choosing to exercise yours:

  1. Firstly, make sure you serve the break notice in good time and adhere to all terms of the lease. Your notice will usually need to be given by post so make sure to keep evidence of your postage or delivery methods. If your notice is being served through an agent, ensure your landlord is aware of this and is aware of the agency and their authority.
  2. If you have any possible concerns about breaching the Break Clause condition, consider undertaking a compliance audit with your surveyor so they can be addressed before its too late and ensure success when exercising the Break Clause.
  3. When exercising a Break Clause make sure to comply to all given conditions, and ensure to keep evidence of doing so. This could include invoice receipts of money paid to the landlord or written confirmation of all keys being returned. This evidence will help provide protection to you and your position throughout the process, providing physical backing and peace of mind.
  4. Make sure vacant possession of the property on the agreed break date can be given, ensuring all persons and possessions are removed from the property and all keys are returned to the landlord.  If you plan on carrying out any work on the property you must guarantee that it does not overrun and therefore effect vacant possession being given.
  5. It is vital that rent is paid up to the break date, as failure to do so will invalidate break notice being given. This may include the rent and all other sums being paid up to the next rent payment day, even if the break date is scheduled after a rent payment date that has just passed. If rent is only paid up to the break date it may again invalidate the notice and would prevent the Break Clause from being exercised.  In order to put yourself in the best position regarding this, your solicitor should ensure your lease includes a clause requiring the landlord to repay any payments made after the break date, such as service charges or insurance rent.

Still need help? Check out our article ‘Understanding your Tenancy Agreement’ for more information. 

And if you’re about to move to new rented accommodation why not get a removals quote in just 2 minutes with Buzzmove.

Published at Fri, 31 May 2019 14:31:54 +0000