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 Up18:03 PM, 28th September 2014, About 10 years ago
Reply to the comment left by "Mark Alexander" at "28/09/2014 - 11:01":
Now that is a fair comment Mark. This Welsh Dragon is still not coming back in to invest, but I take your point which is well made.
Mark Alexander - Founder of Property118
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Sign Up19:20 PM, 28th September 2014, About 10 years ago
Reply to the comment left by "Industry Observer " at "28/09/2014 - 18:03":
Thank you and welcome back 😀
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Mark Smith Head of Chambers Cotswold Barristers
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Sign Up19:30 PM, 28th September 2014, About 10 years ago
Dear thread,
Just to confirm that I was one of the barristers who looked over the document, and I am happy to confirm that my advice at the time was that it is fit for purpose, as indeed it still is.
Mark Smith
Mark Alexander - Founder of Property118
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Sign Up20:28 PM, 28th September 2014, About 10 years ago
Reply to the comment left by "Mark Smith (Barrister-At-Law)" at "28/09/2014 - 19:30":
Thank you Mark 😀
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Industry Observer
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Sign Up7:58 AM, 29th September 2014, About 10 years ago
To every Mark on Property 118.com!!!
No-one is doubting that the document is fit for purpose. What I am querying is why it is needed or, more correctly, whether it is a heavy artillery weapon when a lighter weapon would do.
I have never said the document is flawed, how can I wen I steadfastly refuse to part to MA with my fiver ?!!!
Industry Observer
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Sign Up9:12 AM, 29th September 2014, About 10 years ago
@ Mark Smith
Sorry, just to clarify this comment in the article:-
"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. a deposit dispute, husband learning that wife had moved out and him moving back in or claiming illegal eviction etc"
Sorry re last post just one further thought.
In this case the retention of the deposit was mutually agreed, so same as joint signing of the DPS release form or the necessary confirmation from the tenant being obtained as to what proportion can be retained to the Landlord if the deposit is registered with the other two Schemes. Not that in the case of the latter it stops the tenant changing their mind and raising the dispute later, though I agree that would weaken their case and they would need a strong argument as to why their earlier 'consent' should be withdrawn.
But are you saying that within this Surrender Agreement there is a statement from the tenant that they agree to the deposit being released to the Landlord, or whatever amount of it is stated in the Agreement?
And to be clear is it actually a Deed and witnessed, or just an Agreement, in effect a formal version of a letter?
Mark Alexander - Founder of Property118
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Sign Up9:40 AM, 29th September 2014, About 10 years ago
Reply to the comment left by "Industry Observer " at "29/09/2014 - 09:12":
It is a formal letter which is counter signed by the tenant, it is not a deed and does not need to be for residential transactions.
One of the conditions of release is the tenants acknowledgement that the landlord will retain the tenants deposit as a condition of the arrangement entered into.
As you have suggested, the tenants signature does not prevent them from raising a deposit protection dispute but it significantly weakens their case should they do so and may also give rise to the landlords ability to make claims against the tenant which he would otherwise waive, e.g. Written of rent arrears or rent lost and expenses incurred as a result of having to re-market the property before the end of a fixed tenancy date.
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Industry Observer
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Sign Up9:48 AM, 29th September 2014, About 10 years ago
I assume the Landlord isn't simply retaining the deposit as some sort of bonus if the property is returned in good condition and the rent is up to date?!!!
Any clause that purports such forfeiture would, in my non barrister opinion, be suspect simply because Scheme rules do not cater for it. In fact quite the rteverse Scheme Rules are written bearing in mind it is the tenant's monery and to make it as easy as possible, including being free and no minimum dispute amount, to raise such a dispute.
By "suspect" I mean unenforceable, but doubtless your barristers know better so presumably as Mark Smith says, the document is fit foir purpose. But any clause where a tenant says they forfeit the deposit when none of the provisions in the tenancy agreement supporting such forfeiture apply looks very risky to me.
Mark Alexander - Founder of Property118
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Sign Up10:02 AM, 29th September 2014, About 10 years ago
Reply to the comment left by "Industry Observer " at "29/09/2014 - 09:48":
The purpose of the document is explained clearly in the article that started this discussion. Where has this notion of a "bonus" come from and why?
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Mark Alexander - Founder of Property118
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Sign Up10:02 AM, 29th September 2014, About 10 years ago
Reply to the comment left by "Industry Observer " at "29/09/2014 - 09:48":
The purpose of the document is explained clearly in the article that started this discussion. Where has this notion of a "bonus" come from and why?
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