Author : Mary-Anne Bowring
What can you do if your tenants decide to leave before the end of their contract?
In the current climate, the last thing on many tenant’s minds will be moving. However, there are all kinds of reasons why people decide they are not happy where they are living and seek to leave – sometimes in the middle of their tenancy agreement. So here are some insights into what landlords can do if this happens to you. In principle, tenancy contracts are binding upon both parties and hence can be enforced in a court of law. But in practice, negotiation is generally more effective and less costly than litigation. So good communication – if possible – will help.
When tenants give notice, try to determine their reasons and see if you can address them.
There are basically two reasons why tenants exit contracts early. The first is that circumstances have changed (either their own or something related to the property) and the second is that they are dissatisfied with the service they are receiving as customers. In either case, there may be situations where your tenants feel that they have been let down by you (or your representatives) and are therefore perfectly entitled not just to break their contract but to get their deposit back. In fact, you may discover that they are absolutely right.
If the tenant’s circumstances allow, see if you can claim some form of compensation.
If the tenant’s circumstances are changing for the better (or at least are no worse), then the most pragmatic approach may be to split the difference with your tenant and see if you can come to some form of settlement. When considering this option, remember that your claim against your tenant (if any) would be civil, not criminal. This has several implications and one of them is that a court would expect you to take reasonable steps to mitigate your loss and hence your tenant’s exposure to any claim for damages. Given the demand for rental property in the UK, it’s probably fair to say that most landlords should be able to have new tenants in place within two to three months of their old ones leaving. That being so, you could request either that your existing tenants find a new tenant who is acceptable to you or that they pay a break fee equivalent to two to three month’s rent to allow you to find someone else. The advantage to you is that you (at least) cover the costs of changing over the tenancy without the hassle of having to pursue civil action. The advantage to the tenant is that they can move out without the concern of being pursued for costs and/or of having their credit records negatively impacted.
If the tenant’s circumstances have taken a turn for the worst, it’s usually best just to accept it. If your tenants genuinely can’t pay then you are not going to get your rent. There is no point in pursuing the matter through the courts. Even if you get a judgment in your favour, you still have to collect the money and if they don’t have it, then you can’t get it. You can damage their credit record, but that won’t do you any good. If they go bankrupt, then your CCJ will be erased but your costs will not. If your tenants can pay, you can, in theory, force them either to stay put or to pay you compensation to leave, but you could end up wishing you hadn’t done either. Disgruntled tenants can do a lot to sabotage the re-letting of a property and the internet has increased their power. In short, you could be trading a small, short-term upside for a lot of long-term downsides.
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
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