What to do if your tenants want to move out early?


When you rent your property as a landlord to tenants, you are presenting them with a legal agreement. The term is usually a 12 month AST (assured shorthold tenancy) agreement and the conditions of this agreement is that you have to honour your contract. Should you want to breach the agreement in any way, there must be repercussions that work both ways.

Rather than to get into all the situations, I want to focus on just one because it happens quite often.

Your tenants want to leave early and breach the agreement.

Maybe they are buying a property, maybe they are moving abroad, maybe they cannot afford it and they have lost their jobs, or the relationship with their spouse breaks down. Whatever the reason, the agreement is broken.

Now, I think it is a very important situation to write and speak about as over the past few years, the government has protected tenants from landlords and made out landlords are the bad guys. Please note, for the record, sometimes they are.

But in this situation, if it were to happen the other way and the landlord wanted to breach the agreement and get out early, a tenant could just dig their heels in, not leave and carry on paying rent, there is not much a landlord can do apart from offering a pay off or something to come to an agreement.

Ok, lets go back, your tenant calls or emails you stating: I want to leave the property and I am giving my one month’s notice.

This happens all the time in my Romford letting agency, and I am firstly going to state the ‘law’ and ‘your rights as a landlord’ and secondly what to do and how to handle it.

The Tenant Fees Act 2019

For some reason, I have no idea why, but landlords and agents have it in their brains that they cannot charge tenants at all, this is not the case. The June 2019 Tenancy Act was brought in so that tenants would not be taken advantage of and pay ridiculous referencing, administration and moving costs to the landlords, and agencies and quite rightly so.

However, should the tenants breach your AST, then you have the legal right to charge them, see below what the Act actually states.

From 1 June 2019, the only payments that landlords or letting agents can charge to tenants in relation to new contracts are:

  • Payments associated with early termination of the tenancy, when requested by the tenant.

Tenant Fees Act – GOV.UK (www.gov.uk)

There are more charges in the Act, this is not the only charge but for the purpose of the blog, I wanted to point this out.

Therefore, you can charge your tenants for:

  • Agency Fees that you would pay to find a new tenant to replace them.
  • Inventory and Check Out costs.
  • Deposit Registration Costs (if needed)
  • Anything associated with payments associated with the early termination.

The above can equate to quite a lot of money, approximately up to £1,000 inclusive of VAT and this should not be something a landlord should have to pay.

However, it is important to state that you MUST put this in the contract/AST agreement so that you are clear with a tenant upon signing the agreement that there will be costs incurred should they breach agreement and want to terminate early.

Plan B: Make your tenant fulfil their contractual agreement and pay their remaining rent.

Most landlords are probably thinking, you don’t need to charge them a fee, they are obligated to pay your rent regardless. If they breach agreement in month 6 of a 12-month AST, then they owe you 6 months’ worth of rent.

Totally agreed. However, in reality, I am not a believer of making somebody else’s life difficult, it will probably cause you more problems down the line.

Let’s say, if you propose to your tenant that they need to pay you 6 months’ worth of rent and fulfil their obligations in their agreement, then you are setting yourself up for a problem.

e.g., your tenant gets up and leaves, moves abroad and leaves. You spend a load of money chasing them to bring them to court to cough up your remaining 6 months’ worth of rent.

Firstly, you cannot re-rent the property as you cannot have 2 rents being paid at the same time on the property, therefore, leaving it vacant and yourself in a position where you are throwing good money after bad, it doesn’t make sense. By the time you get them into court, slap a CCJ on them and obtain their deposit, you could have focused your time in keeping good relations with your current tenants, empathising with them and allow them out of contract whilst renting the property again to another tenant.

You are running a business; it doesn’t have to be difficult but rather like receiving payment for a kind service that you are offering.

I am great believer in the positive energy and where I focus my time/efforts.

How do you receipt the ‘Early Termination Fee’ from your tenants?

This is a really important step, as a landlord you want to be in control of this situation. The last thing you want to do is allow your tenants to leave and then take the funds from the security deposit (which a lot of tenants will try to palm you off with).

This Early Termination Fee is NOT what the security deposit is for!

You must make this clear to your tenants, they are obliged to pay your rent and fulfil the agreement they signed firstly, I always make this point clear, however, I am a kind landlord, and I will allow them to leave early providing that they pay an early termination cost which includes Agency fees, inventory, check out, etc…

Let’s say it is £1,000 including VAT.

Part of the condition to remarket the property is that this fee is paid upfront, it is not deposit and it is not part of the rent.

Once the money is paid, I will then remarket the property and conduct viewings. We always state that we must be happy with a new tenant to move forward and will not be rushed, however, we also are aware that we want a smooth process so we will need their help with keeping the property immaculate whilst we conduct viewings. This way it helps you rent the property to a good, clean and paying tenant.

Once we agree a new date with the new tenant, I always leave a 5-day void just in case there are surprises and for the inventory/check out to occur.

There will always be a few days rent you will lose, however, this would have happened if they had left the tenancy on the correct terms, so this is unavoidable if you want to do it properly.

In Conclusion:

Things happen in tenancies and although I leave it up to you what to do, my steps are just a guide that has served me well in this situation.

I am always fair, human but also firm. If someone is to come to me with a problem, then I want to sort it and help them, however, not at the expense of myself because essentially allowing your tenant to break the terms of the agreement is a favour for them. Therefore, you must let them know that this is the case.

Most tenants will understand and thank you that there is a way out of the agreement, however, some tenants might make things difficult.

Again please read my blog about How to find a good tenant | Keystones Property (key-stones.co.uk) because usually it is in the preparation on whether a tenant is going to be amicable or not.

If you do want my advice, then do not hesitate to get in touch with me on [email protected].

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