The upcoming Renters’ Rights Bill is prompting tenants to quit their tenancies via early surrender agreements, Propertymark’s former president Greg Tsuman has said.
The Bill will end fixed term tenancies, enabling tenants to leave by simply serving two months’ notice, whilst landlords will have to give a valid reason if they want their property back.
An early surrender agreement is what’s currently in place, and it enables a tenant to quit a fixed-term tenancy, provided the landlord agrees, without paying rent for the remainder of the term.
A number of tenants are mistakenly thinking the Bill has already passed and are therefore initiating early surrender agreements.
Tsuman urged landlords to avoid agreeing to them unless there are exceptional circumstances. After all, the fixed term contracts are potentially going to disappear for good in only a matter of months.
Tsuman said: “There must be a valid reason why landlords may want to waive their rights before they lose their rights.
“For example, if a landlord is selling in the future, it may suit their plans to agree to an early surrender agreement.
“Agreeing to an early surrender increases their risk of getting fined, experiencing loss of revenue, and additional expenses which they may not be able to cover.
“We have seen tenants turn on their landlord as soon as the early surrender agreement was signed. Once tenants are no longer contractually bound, some may feel emboldened to act unreasonably or even make threats.
“It’s a good reminder to document everything and, where possible, ensure mutual surrender terms include clauses about post-surrender conduct or settlement of disputes.”
The Tenant Fees Act 2019 became law on 1 June 2019. Its rules stop letting agents and landlords from charging fees to tenants in England and establishes a cap for tenancy deposits.
However, it has had unintended consequences, Tsuman warned, as a recent First Tier Tribunal decision, as administered by HM Courts and Tribunal Service, where the tribunal judge ruled that charging early-exiting tenants for lost rent and agency fees constituted a prohibited payment under the Act.
Tsuman added: “A landlord putting forward an early surrender agreement even if this is financially better for the tenant than holding them to the existing contract, could land them with a significant fine and an inability to recover their costs, and that is the unintended consequence of the Tenant Fees Act.”
