Assured Shorthold Tenancies (AST’s)
When entering into a tenancy agreement it is vitally important that the seriousness and implications of the document you are signing are fully understood.
An Assured Shorthold Tenancy (AST for short), is a legally binding contract between tenants and landlords. The commitment is that the landlord will rent a property to a tenant for a set period of time, which is detailed in the agreement and is typically 6 or 12 months, and that neither party can end this contract until its expiry (end date). The amount of rent and deposit that is to be paid will be written into the AST, along with various obligations that both the landlord and tenant need to fulfil.
Before the contract is due to expire both landlord and tenant would need to decide if they wish for the tenancy to continue, which must be mutually agreed, or if the tenancy is to end.
How to end an AST when it is naturally due to expire
If a tenant wishes to end the tenancy, then he should provide the landlord as much notice as possible of this, ideally 2 months’ notice and certainly not less than one months’ notice. If a tenant serves notice then the property will be placed back onto the market, and the tenant will be asked for mutually convenient dates for access to carry out viewings. Clause 6.3 of our agreement states:
Within the last two months of the tenancy to permit the Landlord or any person authorised by the Landlord or the Landlord's Agent at reasonable hours in daytime to enter and view the Property with prospective tenants or purchasers, having first given the Tenant a reasonable period of notice.
If a landlord does not wish to continue with the tenancy, then notice must be served to the tenant in a prescribed format, called a Section 21 Notice form 6a. More information on this can be found here: https://www.gov.uk/evicting-tenants/section-21-and-section-8-notices
How to end an AST mid contract
The real difficulties arise if a tenant finds themselves in a situation where they no longer wish to honour the terms of the AST they have signed, and want to end the contract early.
As the AST is a legally binding document, the only way this can be achieved is by agreement with your landlord. Most landlords do agree to an early termination providing they are not financially affected by this breach of contract.
If your landlord agrees, then this means that providing the tenant pays the rent up until the date a new tenant moves in and all of the landlords out of pocket costs and charges, then an early termination can take place. A tenant will never need to pay the landlord more than the amount of rent that would be legally due if the contract was not being breached. Under the Tenant Fees Act 2019 there are very few costs or charges that a tenant is liable for, but this charge is a legally permitted one. See page 71:
How to calculate a landlord’s costs and charges
The Tenant Fees Act stipulates that the landlord can charge you the rent until the day a new tenant moves in PLUS his costs and charges
The rent is fairly straightforward, a tenant must pay the full rent up until the day a new tenant moves in, if the new tenant moves in mid-way through your normal rental period, then any over payment of rent you have made will be refunded to you. EG if your rent payment day is the 1st day of each month, and on the 1st of June you paid one month’s rent, but a new tenant moved into the property on the 26th June, you will be refunded rent for the 26th June to 30th June.
The costs and charges are less straightforward. The out-of-pocket fees a landlord will need to pay are all the fees due in order to market the property and move a new tenant in. The fees the landlord pays are listed here:
Broken down these are:
Tenant find fee: 3 weeks rent plus VAT
Check out Fee: £100.00 Plus VAT
Inventory Fee: £125.00 - £160.00 Plus VAT (depending on property size)
So as an example: If the monthly rent is £1000.00 per calendar month and the property is a 2 bedroom flat, the costs and charges that the tenant would be liable for are:
Tenant find fee: £1000.00 x 12 months divided by 52 to calculate weekly rent x 3 = £692.31 plus vat = £830.77 incl VAT
Plus check out fee of £120.00 including VAT
Plus inventory fee of £150.00 including VAT
TOTAL Fee tenant liable for = £1100.77 including VAT
As you can see the costs and charges are fairly hefty, so its imperative that tenants do not take on a tenancy unless they are absolutely sure that they can meet the contractual terms of that agreement.
Conclusion
If you find yourself in a situation where you can no longer honour the terms of your tenancy, please speak to your agent or landlord immediately, as usually the faster the property is re let, the less your financial exposure will ultimately be.
** A tenant will never be liable to pay to the landlord more in charges than they would have naturally paid in rent, had the tenancy not been breached.
Debbie Jones CERTCIH FARLA
