Lost job. To pay thousands of pounds to break rental contract?

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expri
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Lost job. To pay thousands of pounds to break rental contract?

Postby expri » Fri Jun 12, 2020 9:10 pm

Hi, I'm in a pickle as I lost my contract job due to this coronavirus  situation and do not qualify for furlough. So, I have to leave my present flat. Below is the clause attached to the rental contract which I had stupidly signed without reading thoroughly. I still have one more year on my lease. Am I suppose to pay the 11% + VAT (13.2%) of the rent for 12 months + £144 + £480  irregardless whether the landlord found a new tenant or not? Can someone please enlighten me!

'If the Tenant requests to surrender the tenancy prior to the end of the fixed term, and the Landlord agrees to the surrender, then the Tenant will be responsible for rent until the earlier of the expiry of the tenancy under this agreement and the date the Landlord or a new tenant takes possession of the Premises. The Tenant will also be responsible for any reasonable costs the Landlord incurs in effecting a surrender of the tenancy and finding a replacement tenant.  The Landlord will advise of the actual costs at the time of the request, each case being considered on its own merits. As a general guideline, these costs may include (but not limited to): ·

The letting fee of up to 11% + VAT (13.2%) of the rent from the date of early surrender until the original end date of the Tenancy, · A proportion (being the number of months to be surrendered early as a percentage of the current fixed term) of the Landlord’s costs in sum of £144 (inc.) for an inventory clerk checking the new Tenant into the Property, · A proportion (being the number of months to be surrendered early as a percentage of the current fixed term) of the Landlord’s costs in sum of £480 (inc.) being the cost of administering the new Tenancy, preparing the Tenancy Agreement, collating references, checking the new Tenant’s Right to Rent and registering the deposit with an approved Government scheme For the surrender and grant of a new tenancy on similar terms, the Landlord’s costs would be £300 (inc.) plus any associated inventory costs. '
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SW11er
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby SW11er » Fri Jun 12, 2020 9:25 pm

Hopefully an expert will be on soon to give you an advice. I know agents pop up on here from time to time. My understanding is that there are limitations on what Landlords can charge tenants these days and I wouldn’t be surprised if such charges are not permitted.

Have a search for Tenant Fees Act 2019
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LionelChe
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby LionelChe » Mon Jun 15, 2020 7:15 am

Legally what has as happened to you as a result of Covid has little or no standing in law.
We have all done this and sadly learnt the lesson about understanding contracts before signing them ie ‘ Never sign anything unless you understand it and agree with it’
Unfortunately this is your responsibility and you will have to pay up! Having said that if there is a way out then depending on a reply in a forum is an equally daft route to take, if it were me I would immediately engage a conveyancing lawyer to look over the contract to see if you can escape it in any way.
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chorister
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby chorister » Mon Jun 15, 2020 7:55 am

Totally agree re getting proper advice - one option to explore - if you have to pay anyway then serve notice and stay during the 12 month notice period instead of paying for somewhere else as well.
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puffer
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby puffer » Mon Jun 15, 2020 9:27 am

I don't believe, under the Tenant Fee Act of 2019, that the landlord is entitled to charge you anything that exceeds the income s/he loses due to your early termination of the tenancy.  In other words, if another tenancy starts the day after your's prematurely ends, you will not owe the landlord anything.  If s/he is paying the letting fee to the managing agent already, I don't believe they can make you pay for it once you leave.  See page 71 in the document - link below.
Tenant Fee Act 2019

Quote the wording of the Act in your correspondence.  Hopefully that will do the trick!  Best of luck.
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expri
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby expri » Mon Jun 15, 2020 11:24 am

LionelChe wrote:
Mon Jun 15, 2020 7:15 am
Legally what has as happened to you as a result of Covid has little or no standing in law.
We have all done this and sadly learnt the lesson about understanding contracts before signing them ie ‘ Never sign anything unless you understand it and agree with it’
Unfortunately this is your responsibility and you will have to pay up! Having said that if there is a way out then depending on a reply in a forum is an equally daft route to take, if it were me I would immediately engage a conveyancing lawyer to look over the contract to see if you can escape it in any way.

Are you trolling me?  I lost my job aka living off my limited savings. Instead of adding oil to fire, say something useful or kind please especially in the wake of the looming recession. If I have a lawyer at my beck and call , I would have done that!
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Happychange18
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby Happychange18 » Mon Jun 15, 2020 12:02 pm

I suspect that sum is the letting agency’s fees to the landlord which if you leave the tenancy the landlord is still liable to pay. So potentially you may not be able to get out of this. Best to check with the landlord.
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Jonny Dyson Property Consultants
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby Jonny Dyson Property Consultants » Mon Jun 15, 2020 12:09 pm

Hi Expri,

Although much of this will be down to the particular contract and agent, common sense should prevail.

The government has brought in temporary measures to prevent evictions, however your situation is slightly different as you are quite happy to move out.  Given this, I would have thought that any reputable agent would want to work with you to minimise the cost for their client - the landlord.  Contracts are contracts, however most agents (I was one myself for many years) will try to help you.  The 11% is simply their fee that gets paid to them by the landlord - interesting to see that they seem to be saying that even if they find a replacement tenant straightaway, you still have to pay their fee until the end of your tenancy, even though you have moved out and the landlord has a new tenant.  This means that effectively they are being paid twice!!

The tenant fee ban last year did away with tenants costs, so I would argue that this should not be counted, and yes, of course you would be liable for the inventory costs anyway.

Overall I would suggest that you have a sensible conversation with both the agent and your landlord, explain the situation and try to come to an amicable solution.  As a landlord myself, I just want happy tenants as it makes life so much easier for everyone.  If you propose to them that you will allow them to re-market the property straightaway, give them access to viewings whenever they like, and make sure that the flat always looks great then they should be able to let it out fairly quickly.  You're much better to just be upfront and try and work with everyone in my opinion.

Feel free to PM me if there is any more in depth information you need.

Jonny
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notjustamumx
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby notjustamumx » Mon Jun 15, 2020 2:13 pm

So sorry you have lost your job. I was until very recently a tenant, and am now a landlord, so my advice is;
- the contract states that each case will be based on its own merit. Therefore contact your landlord to explain the situation and that you would like to negotiate an exit from the contract. Make it clear you cannot afford to pay the rent nor can afford high exit fees. Also offer to be as helpful as possible to the landlord if they are seeking a new tenant - state the flat will be clean, tidy and welcoming, that viewings / photos can take place during the remainder of your stay, etc. See what they come back with.
- If your contract was signed after June 2019, the landlord can only claim 'reasonable expenses'. So no, I would argue that the landlord cannot claim fees from you for the remaining duration of the contract if they find another tenant. However be wary that they may not be able to find a tenant as easily or for the same rent if the market has changed. If you think you are being charged excessively, and can't afford a lawyer, try Shelter or Citizen's Advice for advice. But it may not come to that if your landlord is fair and reasonable.
Shelter's website offers some good advice, I can't post the link here unfortunately.
Good luck.
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99pctpractice
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby 99pctpractice » Mon Jun 15, 2020 3:17 pm

V sorry to hear about your dilemma. Although the new laws brought in around coronavirus don’t help much, they do prevent landlords from evicting tenants (even if they don’t pay), so this does mean landlords are much more willing to talk to their tenants because any income is better than none. Unless your landlord is a total ****, they will be sympathetic and try to work with you on this (and based on the new laws they can benefit from a payment holiday from their mortgage if your quitting the tenancy early leaves them with difficulties in meeting their mortgage payments). I spoke with an estate agent who said that 25% of tenants of properties he managed had requested rent reductions. So you are by no means alone in this and if you tell the landlord that you are unable to pay because of your changed circumstances then they should understand and hopefully be reasonable...good luck!!
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99pctpractice
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby 99pctpractice » Mon Jun 15, 2020 4:15 pm

Ps one other thing to consider. The 11% + VAT is letting fee, not a management fee. This is the cost they will have had to pay their agent to let the property initially, which they are trying to recoup (they will likely have had to pay this entire amount to the estate agents upfront). As a landlord, they can use this letting fee as an allowable expense that they can deduct from their taxable income for the property. So the actual cost to them if you don’t pay it is less than the full amount of the fee. You can use this as an argument against paying the full amount. Another way that you could argue against paying them this letting fee is to suggest they use Open rent to let the property next time and you will be available to manage the viewings. This way they won’t incur letting fees (other than a nominal flat fee) to relet the property so again would struggle to justify charging you the 11% + VAT....
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expri
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Re: Lost job. To pay thousands of pounds to break rental contract?

Postby expri » Tue Jun 16, 2020 4:13 pm

Thank you very much for all your information. I'm still waiting for the decision from the agency. Frankly speaking, I don't think it will be hard to find a new tenant for my flat so I don't know why they are trying to hold on to me as a tenant. Maybe, they are trying to profit from the termination. My contract is signed after June 2019 so the tenant fees clause shouldn't even be in the contract.

The sad thing is I lost my long term contract job and the new one that was supposed to come after it. I haven't even tendered my resignation and both jobs disappeared overnight in April. I told my landlord about this and he offered to put my rent on credit but no rent reduction. Fortunately, I found another job 5 hours outside London at a much lower pay. So, I can't afford to live in London anymore. My visa is running out so I have to take this job outside London or I will have to leave England... soon.

Called Shelter England and they were great help. They did suggest I advertise the flat myself to avoid the advertising fees. Openrent idea is a good idea. Thank you 99pctpractice, notjustamumx, Jonny, puffer, Chorister, SW11er for your kind advices.
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