Charge for early release from AST

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    Charge for early release from AST

    Our tenant has asked to be released 3 months into a 6 month AST (they are leaving the country for good - outside the EU - whatever happens). Contractually I understand they are liable for the full 6 months rent unless we agree a mutual termination, but this may be hard to enforce once they are gone of course.

    They have indicated they are willing to pay the re-marketing / re-signing fees. I would appreciate views from other LLs about whether it is usual to let them go on that basis or if further charges would be appropriate, to cover, for example, potential lost revenue if the new tenants don't move in immediately (would normally make sense to allow a few days between tenants anyway in case cleaning / repairs are needed following checkout), any reduction in the rent we may be able to charge in the current climate, plus my time and effort etc.

    Some of these costs are as yet (by definition) unknown of course. Is it reasonable / normal to charge a lump sum (say half a months rent) plus the direct costs? I don't want to rip anyone off, but similarly have no desire to be out of pocket by being flexible.

    From other threads I believe we would need a Deed of Surrender to confirm whatever is agreed? If they sign, but then leave without paying agreed costs, or if they don't sign the deed but just leave, can the deposit be used to offset these costs?

    Any views would be very welcome

    #2
    Is the deposit protected and if so in what scheme?

    You are correct that you will need a deed of surrender.

    If the tenant really is leaving the EU for good it is highly unlikely to be worth your time and money attempting to enforce a judgment. He may well know that so bear it in mind in your negotiations - he can just walk away with few consequences.
    Disclaimer:

    The above represents my own opinion, derived from personal knowledge and should not be relied upon as definitive or accurate advice. It is offered free of charge and may contain errors or omissions or be an inaccurate opinion of the law. I accept no liability for any loss or damage suffered as a result of relying on the above.

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      #3
      There really are no rules here. It is down to negotiation which in your case will involve keeping in the back of your mind that the tenant may just walk away if you press too hard.

      No way should you complete a deed of surrender without at the same time receiving all outstanding rent and any premium from the tenant and agreeing how the deposit will be dealt with.

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        #4
        Originally posted by MKGaz View Post
        Our tenant has asked to be released 3 months into a 6 month AST (they are leaving the country for good - outside the EU - whatever happens). Contractually I understand they are liable for the full 6 months rent unless we agree a mutual termination, but this may be hard to enforce once they are gone of course.
        Impossible, would more accurately describe it.

        They have indicated they are willing to pay the re-marketing / re-signing fees. I would appreciate views from other LLs about whether it is usual to let them go on that basis or if further charges would be appropriate, to cover, for example, potential lost revenue if the new tenants don't move in immediately (would normally make sense to allow a few days between tenants anyway in case cleaning / repairs are needed following checkout), any reduction in the rent we may be able to charge in the current climate, plus my time and effort etc.
        Forget your time and effort, or potential lost revenue. Essentially, you can ask for whatever you like in exchange for agreeing to an early surrender - you don't have to justify the price as being for X, Y or Z. The default position is that T is liable for rent for the remainder of the fixed term. Obviously, your bargaining power is reduced by the fact that T could, if he wished, simply walk away, and you'd be unable to pursue him via the UK courts.

        Some of these costs are as yet (by definition) unknown of course. Is it reasonable / normal to charge a lump sum (say half a months rent) plus the direct costs? I don't want to rip anyone off, but similarly have no desire to be out of pocket by being flexible.
        It is perfectly normal. The T has signed a binding contract. In your situation, if it were a UK resident T who was working and who I knew I could pursue via the court if necessary, I'd ask for at least the equivalent of a month's rent, more probably six weeks, in exchange for agreeing an early surrender.

        From other threads I believe we would need a Deed of Surrender to confirm whatever is agreed? If they sign, but then leave without paying agreed costs, or if they don't sign the deed but just leave, can the deposit be used to offset these costs?
        The deposit can be set against whatever the contract says it can be set against.

        Yes, ideally you should execute a Deed of Surrender. Even more ideally, the terms of the surrender should be fulfilled before it is signed/executed, i.e. the T should vacate, and pay any lump sum agreed, before you execute the Deed of surrender.

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