'Replacement tenancy' issue

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    'Replacement tenancy' issue

    Good afternoon and thanks for taking the time to read my post.

    Back in October, I found replacement tenants to take over my joint AST (without break clause) which would have run until this July. Because of Covid, I could only find someone who was willing to pay about £400 pcm less than we did.

    There was a clause in our tenancy agreement saying: "If the new tenancy is for a lesser rent, the tenant will remain liable to pay an amount equal to the difference between the original rent and new lower rental figure up to the end of the original fixed term."

    The landlord agreed to the new tenants but there were no written agreements whatsoever as I discussed everything over the phone with the agency (green/yellow colours). I handed over the keys to the new tenants myself as discussed with the agency.

    After the tenancy had ended the agency asked us to pay the shortfall in rent of £3600 so we never got our deposit of £2600 returned.

    I tried disputing it but since it was a joint tenancy the Deposit Scheme needed my joint tenant's approval which he was not willing to give due to personal differences, so that case was dropped.

    Now, after not hearing anything from the agency for more than 6 months they came back to us last month asking for the 'remaining' £1000 to be paid.

    How do I/we stand from a legal perspective? Were we really liable for the shortfall in rent?

    #2
    What was the wording on the legally binding contract you initially signed, this will state exactly what your position is, I would state you are still required to pay the shortfall, as you are still jointly responsible for the rent, it would be the same thing for a guarantor they would be liable. I would either pay or expect a money order against you which will result in a CCJ against you.

    Comment


      #3
      Originally posted by ash72 View Post
      What was the wording on the legally binding contract you initially signed, this will state exactly what your position is, I would state you are still required to pay the shortfall, as you are still jointly responsible for the rent, it would be the same thing for a guarantor they would be liable. I would either pay or expect a money order against you which will result in a CCJ against you.
      "If the new tenancy is for a lesser rent, the tenant will remain liable to pay an amount equal to the difference between the original rent and new lower rental figure up to the end of the original fixed term."

      I read in a similar post that such a clause might not be enforceable.

      Comment


        #4
        Originally posted by berliner View Post
        I read in a similar post that such a clause might not be enforceable.
        I think that that is entirely possible. We need to see the exact wording.

        Who paid the deposit?

        Comment


          #5
          Originally posted by Lawcruncher View Post

          I think that that is entirely possible. We need to see the exact wording.

          Who paid the deposit?
          We each paid half, but how is that relevant to the issue that I've presented, given that we're jointly and severally liable?

          What I quoted before was exact wording of the point 19.2.2 below:

          19.2 Early Termination Costs

          19.2.1 If the Tenant vacates the Property prior to the end of the fixed term (or break clause if applicable), the tenant will remain liable to pay rent until the Fixed Term expires or the property is re-let whichever is earlier.

          19.2.2 And if the new tenancy is for a lesser rent, the tenant will remain liable to pay an amount equal to the difference between the original rent and new lower rental figure up to the end of the original fixed term.

          Comment


            #6
            My view is that the landlord could've just said no to the new tenants and kept us to our obligations under our tenancy agreement.

            If they decide to take legal action I would just say that I never agreed to the new tenants paying a lower rent than us. How would they prove otherwise?

            Comment


              #7
              Originally posted by berliner View Post
              We each paid half, but how is that relevant to the issue that I've presented, given that we're jointly and severally liable?
              If you had paid the whole of the deposit you could argue that you are the sole person entitled to it.

              Without checking I cannot be certain that the joint tenant's approval was necessary, However, I would be inclined to ask the deposit scheme what their authority is for the proposition that such consent is required. I would also remind the joint tenant that you are entitled to a contribution for any balance you have to pay.

              Originally posted by berliner View Post
              19.2 Early Termination Costs

              19.2.1 If the Tenant vacates the Property prior to the end of the fixed term (or break clause if applicable), the tenant will remain liable to pay rent until the Fixed Term expires or the property is re-let whichever is earlier.

              19.2.2 And if the new tenancy is for a lesser rent, the tenant will remain liable to pay an amount equal to the difference between the original rent and new lower rental figure up to the end of the original fixed term.
              I would try the following arguments:

              Clause 19.2.1 is repugnant to the nature of a right to break. A right to break is no such thing if the tenant has to carry on paying after the tenancy has come to an end. You cannot give with one hand and take back with another. (In passing I note that, if you take out the reference to the end of the term, the clause reads: "If the Tenant vacates the Property prior to the end of the break clause" or "If the Tenant vacates the Property prior to the break clause" neither of which makes sense. I am not sure though that that adds anything to the argument.)

              Clause 19.2.2 is unenforceable because the agreement came to an end on the day the tenancy ended. It is now a dead letter except for anything arsing before the tenancy ended. The obligation to pay the shortfall cannot have arisen before the tenancy ended and is therefore unenforceable.

              I would not guarantee the arguments, especially the second one, persuading a County Court judge. I therefore would be reluctant to recommend commencing proceedings relying on them; they are though worth putting forward if sued. If threatened with legal action I would respond that if sued you will counterclaim for the return of the deposit.

              If inclined to start proceedings you can do so without the joint tenant's consent, but will (if I recall the law correctly) have to join him in the action as a defendant.

              Comment


                #8
                Another interpretation of19.2.1 is that it simply accommodates the possible existence of a break clause elsewhere in the document and simply means that early termination isn't really possible.

                The tenant can vacate but is liable for the rent until the end of the fixed term (which sounds correct) or until the tenancy is otherwise ended by the property being relet (which probably isn't really possible without ending the current tenancy).

                19.2.2 is simply a prohibited fee, because what would be charged isn't rent and doesn't fall into any of the permitted payments under the Tenants Fees Act. The amount of the deposit should also be returned by the agent.

                The Tenants Fee Act does allow a charge to a tenant for early termination of a tenancy, but it is limited to the actual cost of the early termination, and future income is not a cost, it is lost income. The cost would be negligible (particularly to the agent unless they're also the landlord).
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                Comment


                  #9
                  Originally posted by jpkeates View Post
                  Another interpretation of19.2.1 is that it simply accommodates the possible existence of a break clause elsewhere in the document and simply means that early termination isn't really possible.
                  That is correct, as we did not have a break clause.

                  Originally posted by jpkeates View Post
                  19.2.2 is simply a prohibited fee, because what would be charged isn't rent and doesn't fall into any of the permitted payments under the Tenants Fees Act. The amount of the deposit should also be returned by the agent.

                  The Tenants Fee Act does allow a charge to a tenant for early termination of a tenancy, but it is limited to the actual cost of the early termination, and future income is not a cost, it is lost income. The cost would be negligible (particularly to the agent unless they're also the landlord).
                  Interesting. I previously thought that our tenancy would not fall under the provisions of the Act because we signed our tenancy agreement in May 2019 before it came into force on 1 June 2019. But I just found out it became retrospective on 1 June 2020 so might it be worth making a money claim for the deposit?

                  Comment


                    #10
                    Originally posted by Lawcruncher View Post

                    If you had paid the whole of the deposit you could argue that you are the sole person entitled to it.

                    Without checking I cannot be certain that the joint tenant's approval was necessary, However, I would be inclined to ask the deposit scheme what their authority is for the proposition that such consent is required. I would also remind the joint tenant that you are entitled to a contribution for any balance you have to pay.
                    Well their argument was that, if our claim through the scheme would end up being successful, they could only return the full deposit to one of us, hence they required consent of the joint tenant.

                    Comment


                      #11
                      The deposit company (as far as I am aware) would require whoever protected the deposit to nominate a lead tenant who would act for all of the joint tenants.
                      They do this because it's often impossible to get a common agreement from different tenants - so I suspect that someone else was the lead tenant and that they needed that person to agree to someone else making a dispute instead of them.
                      If the lead tenant didn't dispute the deposit deduction (or agreed to it) the protecting scheme would have taken that as assent from all of the tenants.
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment


                        #12
                        If there is in fact no break clause that knocks argument 1 on the head.

                        The Tenant Fees Act does not seem to help in this case because the payment required does not exceed the landlord's loss - at least not as I see it.

                        Comment


                          #13
                          Originally posted by berliner View Post
                          Well their argument was that, if our claim through the scheme would end up being successful, they could only return the full deposit to one of us, hence they required consent of the joint tenant.
                          That is not a sound argument. Either the landlord has a claim on the deposit or he does not. If he does not, the deposit should returned in the same way as if the joint tenant had joined in.

                          Comment


                            #14
                            Originally posted by berliner View Post
                            Interesting. I previously thought that our tenancy would not fall under the provisions of the Act because we signed our tenancy agreement in May 2019 before it came into force on 1 June 2019. But I just found out it became retrospective on 1 June 2020 so might it be worth making a money claim for the deposit?
                            It's going to be a tricky claim, to be honest, because I am not quite sure how the court would handle the money flow.

                            If I have understood correctly, there was a joint tenancy at rent x, you moved out and were replaced with a new tenant at rent x-£400.
                            That arrangement persisted for 9 rent periods, so there was a shortfall of £3,600.
                            When the tenancy ended, the deposit of £2,600 was claimed to cover some of the money "owed".
                            But the person who agreed (or didn't act to prevent) the deposit being used paid £1,300 of that, so they essentially handed over that sum of money to help clear your "debt".
                            So I think that the agent owes you £1300 and wants to claim a further £1000.

                            The issue is probably easier to defend to avoid paying the £1,000 than to recover the £1300.

                            If all you want is for this to go away, I'd point out to the agent that if they pursue their claim they're going to have to explain the illegal fee and that you'll counter sue for the rest of the money paid over.

                            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                            Comment


                              #15
                              Originally posted by Lawcruncher View Post
                              The Tenant Fees Act does not seem to help in this case because the payment required does not exceed the landlord's loss - at least not as I see it.
                              The rent is only a factor if the money went to the landlord (not the agent, unless they're the same entity) because the agent is only allowed to charge the "reasonable costs to the letting agent", which don't include rent.

                              The landlord can charge their "loss suffered" but I think it's a big stretch to a) include a shortfall in achievable rent as a "loss" (particularly as it's not in the control of the party being charged) and b), from the sounds of it, it hadn't actually fallen due yet.

                              And I'd imagine the normal "rules" about mitigation should apply
                              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                              Comment

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