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POSTED 20 November 2018 Lettings

What is a Break Clause in Tenancy Lease

What is a tenancy break clause? 

A break clause allows either a tenant or a landlord to end a lease before a term officially finishes – proper procedure must be followed though.

Activating the clause

If you’re contract contains a break clause, it will indicate:

  • When the break clause applies, this could be immediately or after a contract has reached a certain number of weeks or months
  • How much notice a tenant must provide, this is normally one month

Either party wishing to activate the break clause may also have to meet other certain conditions stipulated in the contract. For instance, the tenant must be up to date with all due rent before they’re allowed to use the clause.

Should you decide to activate the break clause, you will need to notify your landlord in writing. You should deliver your letter by hand or post it using recorded delivery. You should only use email to notify the landlord of your decision to activate the clause if your contract explicitly states that this is a viable means to do so.

If a landlord wants to use the break clause, they are required to provide a tenant with at least two months’ notice.

Why have a break clause?

The current focus on helping first time buyers get onto the property ladder through help to buy schemes has started to shift the balance of power from landlords to tenants.

A break clause can offer a tenant the chance to take advantage of the current uncertainty for landlords in order to end a contract early and find a tenancy with more favourable terms.

Additionally, a break clause can provide both a tenant and landlord flexibility.

Alternatives to break clauses

You can’t force a fixed-term tenancy to end if there is no break clause in the contract. What’s more, there is no obligation on a landlord to include such a clause. Of course, if a landlord is unwilling to include a break clause you can always refuse to sign.

A potential alternative to a break clause is a periodic tenancy. This is a tenancy that rolls from one rent collection period to the next and occurs when a fixed-term contract finishes. A periodic tenancy can be terminated at any time and only requires a tenant to provide a landlord with one month’s notice. A landlord meanwhile, needs to give you at least two months’ notice.

It is possible to sign a contract as short as one week and allow it to run straight into a periodic tenancy. Six months used to be the minimum length for a fixed-term tenancy but this lower limit was removed when the Housing Act of 1996 was introduced. A periodic tenancy won’t provide you with much security but it will give you plenty of flexibility, if that’s what you’re after.

Terminating a tenancy with no break clause

If you find yourself tied into a fixed-term tenancy that doesn’t have a break clause and you need to terminate it for whatever reason, you should communicate with your landlord. You may find that they are understanding and agree to a mutual termination.

However, if you’re unable agree to a mutual termination, think very carefully about surrendering your tenancy – you may be contractually obliged to pay full rent for the remainder of the fixed-term contract.