Surrender of Tenancy Agreement
Make Text BiggerUPDATED – 28th May 2019 – this is still as valid today as it was when first published on 21st August 2014.
I have just helped my brother to draft a Surrender of Tenancy Agreement, you can download a copy at the foot of this article, but the story behind it is an interesting one too.
The property was purchased at auction a few years ago, it was an absolute bargain but it’s 250 miles away from where he lives. It was refurbished but rather than sell it and make a quick profit he decided to hold it as an investment. Note that my brother is a property developer and pays the additional rate of tax so if the property had been flipped the profits made would have been taxed at the additional rate as trading income, OUCH! By letting it as an investment and selling it later on the profits would be taxed at the 28% CGT band, less the annual CGT exemption for him and his wife – no brainer!
The first set of tenants were great and stayed just over two years. The property was re-advertised but the second time around the tenant demand was lower. My brother was ready to go on a four week holiday and had considered selling the property on his return. However, a few days before he left a couple made an application to rent the property. The basis of referencing was that rent would be 50/50. She passed referencing but he failed. A commercial decision was taken to accept them anyway subject to 6 weeks deposit. Better than a void period right?
A month into the tenancy Mrs Tenant cheated on Mr Tenant so he left her and went back to Mum. Rent payments became sporadic and she would text day and night with excuses and looking for emotional support. Arrears never quite got to two months so there was little that could be done in terms of serving notice and possibly having to apply apply to the Courts for a possession order until the fixed tenancy period expired. Fortunately, she decided that enough was enough after four months, she didn’t like being in debt and wanted to go back to Mum and surrender her tenancy. A lucky escape for my brother to say the least, he was only too keen to agree!
An agreement was reached amicably, i.e. the tenants would be released early from the tenancy and my brother would keep the deposit to offset the majority of the rent arrears. This still left a few hundred pounds of arrears but my brother agreed to write that off. Thankfully she was very clean and tidy so the flat is fine. It’s now on the market for sale and will probably be snapped up by another landlord or first time buyer in the area. It’s a cracking little property. [UPDATE – the property was indeed sold very quickly to another investor]
Being a shrewd landlord my brother wanted to get everything properly documented so that nothing could come back to haunt him further down the line, e.g. husband learning that wife had moved out and him moving back in or claiming illegal eviction etc. I helped my bother to put the agreement together and he’s buying the beer this weekend – he doesn’t know that yet though 😉
By the way, I did run the agreement past my barrister friends, just in case you’re wondering. He gave it the thumbs up with no suggested amendments **oh how I wish I knew how to do a smug smiley right now**
If you would like a copy of the Tenancy Surrender Agreement for your files, just in case you ever encounter a similar issue, then you can download it by completing the form below. My brother wants nothing out of this but he has asked me to charge £5 per download for the agreement template and for us to use the money to subsidise the running costs of Property118.
You probably don’t need the template today but why not download it anyway? You will be helping to support Property118 and you will have it on file if you ever need it. If you wait until you need it then you may struggle to find this article again so do it now 🙂 It’s only a fiver!
Tenancy Surrender Agreement Download
EDITORS FURTHER NOTE
The heated debate with “Industry Observer” was eventually concluded on page 5 of the comments thread!
Industry Observer
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Sign Up11:04 AM, 27th September 2014, About 10 years ago
Reply to the comment left by "Mark Alexander" at "27/09/2014 - 10:52":
I assume you mean "cannot" stop a dispute and sadly nothing that has been agreed earlier will deflect an Adjudicator. In fact they will take the opposite view on the basis you have tried to get the tenant to sell their birthright!!
Mark Alexander - Founder of Property118
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Sign Up11:20 AM, 27th September 2014, About 10 years ago
Reply to the comment left by "Industry Observer " at "27/09/2014 - 11:04":
Rubbish!
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Romain Garcin
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Sign Up13:24 PM, 27th September 2014, About 10 years ago
IMHO, a letter from the tenant may not be definitive proof of surrender as, for the tenancy to actually end, the surrender must be offered _and_ accepted.
An agreement (by Deed for a belt and braces approach) agreed and signed by both parties, clearly shows offer and acceptance (including of further terms) and thus protects everyone.
Obviously nothing can stop a tenant from disputing anything later on, but how would such dispute go anywhere if the landlord could show the agreement to prove that all was agreed?
Mark Alexander - Founder of Property118
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Sign Up14:18 PM, 27th September 2014, About 10 years ago
Reply to the comment left by "Romain " at "27/09/2014 - 13:24":
Clearly you haven't seen my agreement either Romain.
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Gilly
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Sign Up9:08 AM, 28th September 2014, About 10 years ago
Reply to the comment left by "Mark Alexander" at "27/09/2014 - 14:18":
hahaha Mark - best sales pitch I've seen to get two experts to give you a fiver!
Joseph Preston
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Sign Up9:26 AM, 28th September 2014, About 10 years ago
Absolutely helpful document, Mark. This is going to be useful. Brilliant! Cheers!
Industry Observer
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Sign Up9:57 AM, 28th September 2014, About 10 years ago
Well said Gilly
Mark never criticise without the experience.
I think I am right in saying that you have never actually had a formal dispute with a tenant where all had been nicely agreed, then the ex tenant's wife beat him about the head and said he was a fool to agree to what he had done, so he changed his mind and went to dispute which the Scheme of course accepted.
Maybe you have had such experiences, I can assure you I have, so with respect Mark don't rubbish what you don't know. The birthright comment was slightly tongue in cheek - but only slightly. Any tenant being asked to sign anything where they are agreeing to continue meeting their legal obligations (pay the rent, C Tax etc during any 'notice' period is fine. Asking them to waive their legal rights is dangerous - in my humble opinion very dangerous.
To that end does your Deed strongly advise the tenant to take legal advice before signing - which they would have to pay for when it isn't necessary and is for Landlord benefit? And no, I don't want to pay £5 to have a look and find out!!!
Romain I agree with what you say but the Landlord is accepting, it is simply the format in which it is being done that we are discussin. An exchange of letters signed and dated and freely entered into is just as good - only difference is unlike a Deed they are not witnessed.
Mark Alexander - Founder of Property118
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Sign Up10:31 AM, 28th September 2014, About 10 years ago
Reply to the comment left by "Industry Observer " at "28/09/2014 - 09:57":
I have no idea what you think the document says or even looks like but I know for sure that you have not seen it. I can but wonder why you would feel qualified to provide critique on a document that you have not seen, such critique can only be a reflection on you and not the document.
The barristers who checked it over for me agree that it is fit for purpose and as you might expect of any professional, they read it before arriving at that conclusion!
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Industry Observer
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Sign Up10:53 AM, 28th September 2014, About 10 years ago
Reply to the comment left by "Mark Alexander" at "28/09/2014 - 10:31":
Mark
I am not saying the document is or is not fit for purpose what I am saying is it isn't necessary, it's overkill in my view for a very infrequent occurence.
I'm not critiquing anything how you run your business is entirely up to you. But I won't be investing my fiver, so I'm out!!
Mark Alexander - Founder of Property118
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Sign Up11:01 AM, 28th September 2014, About 10 years ago
Reply to the comment left by "Industry Observer " at "28/09/2014 - 10:53":
The document has been made available to help landlords who are in a similar position to the one described in the main article. It must be a common scenario, otherwise there would have been very few downloads of the document.
As Romain has said, a letter from landlord to tenant which documents the agreement made, and which is countersigned by the tenant in confirmation of that agreement, is all that is required. For people like you and Romain, who it would seem are far more familiar with drafting such letters/documents it may well come to you a second nature. For the average landlord, they would more likely want to seek legal advice to make sure that all angles have been covered. A fiver is a lot less that any legal adviser I know would charge.
Thanks as always for playing devils advocate.
Adios Amigo!
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