12 month contract with 6 month break.

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    12 month contract with 6 month break.

    Hi,

    Can anyone explain the reason why you would have a 12 month contract with a 6 month break clause? From a landlords perspective why not just have a 6 month contract. Is there any benefiit then of a 12 month with 6 month break. New landlord so apologies in advance if this is a silly question.

    Thanks

    DC

    #2
    hi, I always have 12 month fixes with 6 months break clause on my side only (LL). T is legally bound to 12 months & I have option to reclaim property at 6 months.

    For me it is the best option, security of occupation & income & option to take back the property if my circumstances change.

    I have never been questioned that the deal is stacked in my favour. Also, in 6 years & 3 tenants I have never had a void so will carry on with this arrangement.

    Comment


      #3
      With a 6 month AST contract, after the fixed term expires, and if the T remains in occupation, a statutory periodic tenancy will arise. This has statutory notice periods; at least one month from T to LL, at least two months from LL to T, also to expire on the last day of a rental period.

      With a 12 month contract/6 month break clause, the contract can state (for example) that T must give at least two months' notice to end the tenancy (after the initial 6 months/before the end of the fixed term). So that is one advantage, that LL gets more notice if the T wants to end the tenancy sooner than 12 months.

      Another is that LL's s.21(1)(b) notice served within the fixed term is less complex, date-wise, than notice served in a periodic tenancy - if you get the date wrong by even one day on a s.21(4)(a) it renders the notice invalid.

      Third advantage is simply not having to renew the fixed term after six months (assuming that's what T & LL want - if not, then it is equally hassle-free to allow the contract to become periodic).

      Depending on the circumstances, there might also be a potential 'perception' benefit in a longer contract - a sense of more commitment to the 12 months than there might be otherwise, from both parties.

      Potential disadvantage to LL is if rents rise dramatically during the first 6 months (unlikely).

      One point to bear in mind - break clauses can sometimes be ambiguously worded, leading to confusion, or to making the break clause unenforceable, so it's essential to ensure that the contract is professionally drafted. DIY break clauses are a definite no-no.

      Comment


        #4
        Originally posted by westminster View Post
        DIY break clauses are a definite no-no.
        Can we have that up in lights?!

        Comment


          #5
          Originally posted by Lawcruncher View Post
          Can we have that up in lights?!
          I agree. The main defects of DiY clauses are the lack of clarity in L's mind. The clause must always state unambiguously:
          a. who can use the break-right;
          b. when any Notice can be served;
          c. how much notice period is needed between the service date and the operational date; and
          d. what happens about any rent period beyond the operational date.
          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
          4. *- Contact info: click on my name (blue-highlight link).

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