What if a tenant wants to leave before the end of the tenancy?
Sometimes life throws a curveball and tenants circumstances can change, resulting in a tenant requesting to terminate the agreement earlier than the end of the fixed term.
If there is no break clause in the contract allowing the tenant to serve notice, then the landlord has two options:
-
Agree to the surrender, this could be on certain terms
-
Refuse the tenant to leave early
Each case should be considered on an individual basis and landlords should seek legal advice relating to their particular circumstances. For example, there could be a case where the tenant has lost their job and has confirmed they are unable to pay the rent going forward and there is no guarantor guaranteeing the terms of the tenancy.
The landlord could stand firm that the tenant signed a contract for a fixed term and go through court proceedings to obtain a possession order and seek a money judgment for the rent arrears. The court process is incredibly slow so a good few months’ rent could be outstanding by this point. The landlord would then need to try and recover this money.
The landlord does need to look at prospects of getting the money back. If the tenant has no job, no assets and does not own any property then paying to recover the money could be throwing good money after bad.
Tenants’ circumstances could change in the future and landlords could explore again at that point, but the landlord will be out of pocket significantly until that happens and a successful recovery is made.
Alternatively, the landlord could have agreed a surrender with this tenant and then got in a new tenant than can pay the rent going forward. The landlord is happy as he is getting his/her rent money, and the previous tenant isn’t getting into further debt and risking a CCJ in their name.
What is a surrender?
A surrender is an agreement between the landlord and tenant (and possible also a guarantor) to bring the tenancy to an end.
The agreement (whether signed as a deed or simple contract) sets out the terms of the surrender, such as:
- when the tenant will vacate the property
- what happens to the deposit
- whether any money is owed to the landlord
- whether the tenant and guarantor, if any, are still liable for any breaches committed during the tenancy after the surrender.
Once all the necessary parties have signed the surrender and the tenant has vacated the property, the tenancy will be surrendered.
This is a useful tool for landlords and tenants to bring matters to a close on mutually agreed terms without the need for possession proceedings. Surrenders remain a great alternative to possession proceedings, especially now that the courts are likely to be facing a significant backlog of possession claims. They should however be carefully and tactically drafted to minimise the risk of default by the tenant, and to tie up all issues in dispute between the parties where possible.
Top tip
Most of the time issues are easier to resolve if at the early stages. If a tenant is already in 5 months or so rent arrears, then in our experience they are less likely to engage with settlement.
We therefore recommend that as soon as the tenant falls into rent arrears, or confirms that they are suffering financial hardship, seek legal advice to consider all options available such as surrenders or payment plans.
Keep the lines of communication open with the tenant and if contact is made at the early stages there is more chance of keeping the relationship with the tenant positive and working together to reach a resolution. There will be some situations where court unfortunately cannot be avoided and if it is clear that a settlement is not going happen, then it is advised to seek legal advice to serve notice as soon as possible.
