Tenants Break

[Brompton]

I have agreed an AST renewal on the basis of a 12 month term from 30th April with a tenant only break on 29th October subject to giving written notice to the landlord on or before 29th September. However the letting agents Renewals Dept who are dealing with the documentation have stated that this clause would be deemed unfair under regulations set by the OFT and Financial Conduct Authority as the "window" during which notice can be served restricts the tenants rights to serve notice.
I have looked through the Guidance on Unfair Contract Terms in Tenancy Agreements issued by the OFT in Sept 2005 (which doesn't appear to have been superseded) and cannot see anything which supports this assertion. I have put this to the Renewals Dept who have stated that they are bound to follow the requirements of their Compliance Dept and can only use their standard clause which amounts to a rolling landlords and tenants break after the 6th month of the term (I don't have the precise wording to hand)
Their position on the legality of the break agreed with the tenant doesn't look right to me (as it can't be an unusual scenario). However I am dealing with a large national agent and now recall a discussion with the letting agent a couple of years ago (before they were bought out) when it was stated that they could only negotiate a break clause similar to the standard clause outlined above.
Can anybody with detailed knowledge of OFT/Financial Conduct Authority regulations as they affect letting agents advise as to whether the Renewal Depts advice regarding the legality of the agreed break clause is correct.
Please resist the temptation just to weigh in with your opinions on letting agents and/or advice simply to change agent!
Many thanks

[theartfullodger]

Brompton, are you tenant (I assume?) or landlord, please??

Expecting any part of a lettings agent to understand landlord/tenant law is likely to lead to disappointment & tears:

Are you saying the renewed AST has been signed or not, please??

Who wants it renewed - let me guess, agent, so he may charge (probably) both tenant & landlord fees??

Could you please quote the EXACT wording of the clause (with addresses or names) so we may form a view??

Regardless of the wording it isn't you, me the compliance dept etc etc who decides if it is valid or not, but a judge who hears a case based on it..

Best regards

[jpkeates]

I'd need to see the wording to actually have a useful opinion.

Based on what you've posted.
1 - If the break clause is tenant only it is almost certainly not unfair as it does not limit the tenant, rather it enables the tenant to do something that they otherwise couldn't.
2 - The clause doesn't restrict the tenant's right to give notice. Suggest that they remove the clause and see what has been restricted. Based on what you've said, it is less restrictive with the clause in as the tenant has an additional right.
3 - If the agent can only use a contract you're not happy with you need to replace the agent - they're a business with rules and processes, which is fair enough, leave them to them.

Generally:
Why use a break clause at all? If the tenant would like to leave after 6 months use a 6 month AST.
If you are happy with the tenant and vice versa, why have a new agreement at all? Just let it roll monthly - all of my tenants who have lived in one of my properties for more than 6 months are on a periodic tenancy.

[Brompton]

I am a Landlord - the terms of the renewal are agreed (tenant was offered a 12 month term by the agent and came back to me direct with a request to a for a 6 month break - which I agreed on the basis of a fixed break at the end of the 6th month subject to at least 1 months prior written notice) The agents renewal dept is instructed to draw up the new tenancy agreement (so there is no precise wording at this stage) - and have advised that they are unable to do so for the reasons outlined above.
The nub of the issue is whether there is anything in law which would prevent a properly drafted tenant only break at the end of the 6th month of a 12 month tenancy subject to at least 1 months prior written notice by the tenant, being enforcible. The Renewals Dept have further stated that whilst "such a clause has been agreed between both parties, if the tenants ever changed their mind and went to Court they would strike the clause out (as regulations state) leaving them open to give notice at any point" Presumably this means that, in their view, a Judge would regard notice given at any time before (or perhaps even after) the break date would be valid.
The more I look at this the more I think the problem may be with requirements set by their Compliance Dept - who are concerned about the risk to their business of poorly drafted break clauses being included in tenancy agreements (in which case trying to justify their position on the basis of the law is seriously out of order) - but I may be missing something - hence the question

[theartfullodger]

Don't bother to renew, continue as periodic v(easier - nothing to do) or if you have a reason for wanting it done (for you, not for agent) do 6 month AST.

Fire agent, they clearly don't understand.

[Brompton]

The 12 month fixed term with a fixed break gives us 6 months income security (which is important to us) and avoids the additional cost of issuing new tenancy agreement in 6 months time if the break isn't exercised.
See agents further explanation above.
The agent has handled this very badly from the outset - if they are just seeking to minimise their business risk I will ask them to make an exception in this instance.

[Lawcruncher]

Is it unfair to grant a tenancy for a year without a right to break? Answer: No. It cannot therefore be unfair to grant a tenancy for a year with a right to break exercisable only on one date. In any event whatever is agreed in this case cannot be an unfair term because it will have been individually negotiated and included at the instigation of the tenant.

It is quite incredible that an agency thinks it has the right to dictate what can and cannot go into a tenancy agreement.

[mariner]

"The 12 month fixed term with a fixed break gives us 6 months income security (which is important to us) and avoids the additional cost of issuing new tenancy agreement in 6 months time if the break isn't exercised."

If the break is not exercied as stated, the fixed term stays at 12 months and no new AST required at 6 month point. The break clause is inequitable as it doesn't provide LL with same opportunity to break at 6 months (LLs circumstances can also change) and why only 1 month Notice to invoke break clause? the usual AST standard is 2 months.
I fear that break clause could cause unexpected grief for both T & LL. Just offer min 6 month AST.

[JK0]

I keep looking at this thread wondering what the tenant has broken.

[Ericthelobster]

Is it unfair to grant a tenancy for a year without a right to break? Answer: No. It cannot therefore be unfair to grant a tenancy for a year with a right to break exercisable only on one date. In any event whatever is agreed in this case cannot be an unfair term because it will have been individually negotiated and included at the instigation of the tenant.

Agreed. The more common scenario with break clauses is that agents are asked by landlords to insert a 'landlord-only' clause. That could indeed be rightly viewed as unfair to the tenant, and it would be a bad idea to set up an tenancy agreement that way. But even then, as stated in #2, there's nothing in law to prevent it, and it's only if such a 'landlord-only' agreement were challenged in court that there could be a problem, and for that reason an agency should certainly advise against the inclusion of such a clause. But refusing point blank to do so? And applying the same logic to a tenant-only break clause? Fire them.

[Ericthelobster]

I keep looking at this thread wondering what the tenant has broken.

I thought maybe the OP was proffering advice to use waterboarding as a novel means of extracting rent arrears

[Brompton]

Thanks for your input. Having reflected on the situation overnight, it seems to me that whilst the agents conduct has been unsatisfactory, the best course of action for us is to renew using their standard form break clause (although I will check the detail of it when it is to hand - we are on holiday at the moment) which looks very similar to a 6 month fixed term continuing as a periodic tenancy. We can then review our contract with the agent ( who have been good at finding reliable tenants for us over the past 10 yrs - but have now been bought out by a national firm with offices country wide) during the next 6 months.