How to use Break Clauses in preparing Tenancy Agreements

What exactly is a break clause?

A break clause is basically a clause present in a Tenancy Agreement, which allows a landlord and/or tenant to end the tenancy even before the end of the tenancy period, without paying any incurred financial penalties.

However, if there is no break clause present in the tenancy agreement, the tenant is considered responsible for paying the rent for the full tenancy period. He has to pay the rent even if he moves out of the property before the last day of the tenancy period.

How a break clause can be used by the Landlords?

An important point to note here is that even if the break clause is included in the tenancy agreement, under the Housing Act 1988  landlord is prohibited to get possession of his property for at least six months after the agreement begins. So, a landlord can only use break clause to evict his tenant if the tenants have been using his property for six or more than six months. Also, it’s mandatory that the landlord must serve at least two months eviction notice to his tenants, which can be done by issuing the notice during the fourth month in the tenancy.

Landlord is required to issue a Section 21 – Notice of Possession to his tenants in order to put in force the break clause.

How a break clause can be used by a Tenant?

In case the tenant wants to use the break clause, he must serve a notice in written (but not a Section 21eveiction notice) after a time period of 6 months in the tenancy agreement. The first step is to prepare properly written complete document with his signature, and then surrenders the tenancy to the landlord. Here, also, a two month notice is required on part of the tenant before terminating the fixed period tenancy.

What a landlord can do if the tenant refuses to vacate the property?

If the tenant refuses to leave the property even after landlord enforces the break clause under Section 21, the next step a landlord can take is to issue the Court proceedings.  Landlord can also request a Judge to order the possession of his property. The Judge will then analyze the break clause to determine its validity.

What if both landlord and tenant want to terminate the tenancy?

If both landlord and tenant want to terminate the tenancy, then break clause has no role to play in the whole process. If both parties agree to end the tenancy, they can easily do this by just surrendering the tenancy. This can be easily accomplished by a written document, signed by both parties.