Assured Shorthold Tenancy with break clause vs Two-year Fixed Tenancy?

Assured Shorthold Tenancy with break clause vs Two-year Fixed Tenancy?

11:39 AM, 3rd August 2022, About 2 years ago 27

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We are private landlords by default. For the past 5 years we have had a couple rent our property under an Assured Shorthold Tenancy agreement which includes a usual break clause.

We are now looking to renew the tenancy agreement for another two years, but the letting agent suggests that we enter into a two-year fixed tenancy agreement. The implications of which we know little about other than we can’t end the tenancy unless the tenants are in serious breach of contract AND we have to take them to court to resolve the breach.

Question: Should we stick to a tenancy agreement with the usual break clause or should we change to a two-year fixed-term tenancy agreement?

Your advice and suggestions will be most appreciated.

Thank you.
Xiaolei


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Yvonne Francis

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17:39 PM, 6th August 2022, About 2 years ago

Sorry, I should have said no AST's and no Fixed terms. It's a killer for me in student accommodation and I think it could be difficult in many other tenacies.

Puzzler

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20:38 PM, 6th August 2022, About 2 years ago

Foxtons - Clear and reasonable and commensurate with the work actually required.

David Smith

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21:09 PM, 6th August 2022, About 2 years ago

Reply to the comment left by Puzzler at 06/08/2022 - 20:38
I would never use Foxton’s again!!

CMS

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3:07 AM, 7th August 2022, About 2 years ago

If your usual break clause can be exercised by either you or the tenant then you have to consider whether you would be ok with the tenant breaking the tenancy after a year. If the break clause is only exerciseable by you and the tenant accepts its inclusion (without wanting the rent discounted because of the clause) then i guess it doesnt hurt.

It does sound though as if you would only want rid of the tenant if they breached the tenancy. That being the case, i assume they are a good tenant and you want to keep them, so (if the break clause is mutual) you may be better off dropping the break clause so they are tied in for 2 years. Add in a rent review if you dont want a set rent for the whole 2 years.

Best, Charles

Graham Bowcock

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8:59 AM, 8th August 2022, About 2 years ago

Just to avoid any confusion, your use of the term "break clause" is misleading.

You talk in your original post about "the usual break clause", but there is no such thing. In fact in ASTs they are quite rare, usually being a tenant's only break for specific circumstances (e.g. moving for work).

What I think you mean is you will grant a fixed term of 6 months; this gives you the flexibilty to end it at that point. Probably no need to be concerend about break clauses at all.

Nothing fundamentally wrong with granting a longer term, if you're happy with the tenants.

Tony West

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10:59 AM, 10th November 2022, About 2 years ago

Don't do a 24 month fix. The agent gets paid the full 24 months even if the tenancy comes to an end. We had a similar arrangement and then the tenants split, one tenant left the flat and the remaining tenant had to go on benefits. We could only get rid of the tenant if they defaulted for a few months and then after going through court. You can lose money during this time, the tenant is seriously stressed because they can't afford the penalty to break the fixed arrangement and the agents are smiling - still being paid whatever. Anyway, with mortgage rates and rents going up its probably not sensible anyway

David Smith

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11:19 AM, 10th November 2022, About 2 years ago

Reply to the comment left by Tony West at 10/11/2022 - 10:59
If I signed a 24 Month agreement I always get in writing from the agent that they will refund me their fee’s on a pro rata basis if the tenants leave early.

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