Option to extend

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  • Option to extend

    I'd really appreciate some help and advice please.

    I rented out my flat from 21/01/2011 to 20/01/2012 due to a work relocation. The agent advised me to include an option to extend for a further 12 months in the contract. They told me "verbally" that if I agreed at the time of renewal the tenants could take the property for 12 months rather than a rolling monthly agreement. I took this to mean that I effectively still had a break clause after the first year. Bearing in mind this is the first time I have either rented myself or rented a property out.

    My situation has changed a little now with my wife falling pregnant, and requiring specialist treatment in london due to complications, and I wish to terminate the rental and move her back into my flat. Initially the tennants were willing to vacate early, but having found the market has moved significantly in the last 9/10 months, realise that they will have to pay £100 per week extra to find a similar property, are now wanting to extend the contract. I am prepared to offer them some compensation to move, but the agent has now told me I will be liable for the agents fees for another 12 months, if they do move out as they have said they want to extend.

    I'm pretty confused and upset over what is happening, and would appreciate some advice.

    thanks

    Jon

  • #2
    Can you let us know the exact wording of the renewal clause because as I read it you have agreed in advance that they can stay for the further 12 months.

    Comment


    • #3
      Thanks Snorkers,

      RENEWAL OPTION – 2nd YEAR - Subject to the proper performance by the Tenant of its obligations under this
      Agreement, the Tenant shall have the option of renewing this Agreement for a further year from 20 January 2012 to 19th
      January 2013 under the same Terms & Conditions other than this option to renew and for the rental to be increased.
      This% percentage rent increase will be applied to the rent in line with the retail price index (RPI) published in the month
      before this increase becomes due at a minimum of 3% and a maximum of 8%. Notice, should the Tenants wish to
      operate the option to renew must be given in writing to the Landlords Agent no later than two calendar months prior to
      the end of the current term.


      I've just copied and pasted from the contract. My main beef is that I was led to believe that the option still effectively had a break clause, and if I had known that it was a one sided option I would never have agreed to it.

      Comment


      • #4
        You haven't tried to discourage the tenant from taking up the option by requesting a larger-than-8% increase for next year?

        To me it seems pretty clear that the tenants do indeed have a right to a further 12 month term at the appropriate rent. This offer was made by you (via your agent) so I can't see you being able to argue it as an unfair term in court.

        Even if the tenants do not exercise this right, it still doesn't mean they will be leaving on the 19th Jan 2012. Section 5 of the 1988 Housing Act means they will have a statutory periodic tenancy - you will need to go to court to involuntarily evict them.

        You may have a claim against your agent, but that depends on what instructions / authority you gave to them in the agency agreement, and what evidence you have regarding this clause - what you 'thought' won't really count for much.

        Comment


        • #5
          Originally posted by jonb View Post
          ...but the agent has now told me I will be liable for the agents fees for another 12 months, if they do move out as they have said they want to extend.
          I think you need to ask the agents where it says that.

          The tenants' can of course rely on what is in the agreement.

          RENEWAL OPTION – 2nd YEAR - Subject to the proper performance by the Tenant of its obligations under this Agreement, the Tenant shall have the option of renewing this Agreement for a further year from 20 January 2012 to 19th January 2013 under the same Terms & Conditions other than this option to renew * and for the rental to be increased. This% percentage rent increase will be applied to the rent in line with the retail price index (RPI) published in the month before this increase becomes due at a minimum of 3% and a maximum of 8%. Notice, should the Tenants wish to operate the option to renew must be given in writing to the Landlords Agent no later than two calendar months prior to the end of the current term.


          Ignoring the technicality that strictly a tenancy cannot be renewed, the wording starts to go wrong after the asterisk. It seems first to be saying that the rent under the new lease cannot be increased. In other words:

          other than (a) this option to renew and (b) for the rental to be increased

          What was meant was:

          other than this option to renew and the amount of rent payable

          I suspect a court would be generous and assign this meaning to the words, especially given the words that follow on.

          However, the words that follow on, although referring to an increase, are far from clear. What the clause should provide is that the rent under the new lease is the rent under the old lease increased by the same percentage as the increase in the RPI over the preceding year. The RPI is a figure. Let's say the figure is 1271. We can then rewrite the clause:

          This% percentage rent increase will be applied to the rent in line with 1271

          which is clearly nonense

          There therefore has to be an argument that the option is void for uncertainty because it fails to specfify the rent payable or how it is to be calculated.

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