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Alex J.
Alex J., Solicitor
Category: Property Law
Satisfied Customers: 3557
Experience:  Two years conveyancing experience.
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I hope you're well. I was wondering if it'd be possible to

Customer Question

Hi Josh,
I hope you're well.
I was wondering if it'd be possible to get advice on whether or not the break clause in my AST is unfair and unenforceable?
Essentially, my circumstances changed dramatically when myself and my ex-fiancée split a few months into our 32 month contract. The break clause requires that we pay 10% of the remaining rent + VAT which roughly amounts to roughly £4,000. This fee is the agent's commission, which will be recouped by the next tenant, so they'll receive double commission, in essence.
Am I liable to pay reasonable fees for remarketing the property alone? Or is this fee binding and unavoidable?
Is this break clause enforceable?
Thanks,
Toby
Submitted: 8 months ago.
Category: Property Law
Expert:  Alex J. replied 8 months ago.

Thank you for your question and welcome. My name is ***** ***** I will assist you. Was the clause highlighted to you before the agreement was signed? Does the clause actually say it is payment for the agents commission? Kind regards AJ

Customer: replied 8 months ago.
Hi Alex,I hope you're well, thanks for getting in touch.The clause was highlighted and it does state that it's payment for the agent's commission, I've taken a relevant excerpt from the AST below:This is a fixed term tenancy agreement for the period specified. There is no provision for the Tenant/s or the Landlord/s to terminate the agreement before the expiration of the fixed period. In the event that both parties agree to vary this clause rent will be due up until the end of this agreement or when the Landlord or a new Tenant takes possession of the said premises. In addition, if the request to vary this clause was at the request of the Tenant, the Tenant will reimburse the Landlord the letting commission (10% of the rent + vat) from the date of early termination until the date that this contract was originally due to expire.Regards,Toby
Expert:  Alex J. replied 8 months ago.

Hi Thank you. Potentially this could be construed as a penalty and may be unenforceable. The issue is you signed a fixed term contract. Therefore the landlord could say by breaking the contract you are in breach and liable for his direct losses - the agents commission is potentially a direct loss. To what extent did they highlight this clause before you signed it? Kind regards AJ

Customer: replied 8 months ago.
Hi Alex,The clause was only briefly alluded to when we were negotiating the rent as myself and my ex were worried about the length of the contract we wanted to know if it was possible to break from it. They then briefly brought the clause up. All of which was done verbally over the phone.I believe the loss of commission has a larger affect on the agent as I'd expect they'd have to pass the commission paid in advance by the landlord back to the landlord. The direct loss to the landlord must be far less than £4,000 if that's true. But forgive me if that's incorrect.Thanks for your help,Toby
Expert:  Alex J. replied 8 months ago.

Hi, Thank you. I see your contract is directly with the agent not the landlord? Is there any option to find another tenant at the rent proposed?

Customer: replied 8 months ago.
Hi Alex,
Hope you're day is going well so far.
Yes, that's correct. The landlord has said he'll allow me to move out as long as another tenant is found. I've proposed that I find a new tenant to the agent in an attempt to reduce the fee, but the agent refused to budge and is still demanding the full fee to be paid.
Thanks,
Toby
Expert:  Alex J. replied 8 months ago.

Hi, Thank you. If you find another tenant then the agent will be getting double commission this would make the clause a purely penalty for terminating the contract. Penalties are unenforceable under English law. I write to the agent and explain that you should not have to pay the fee if a new tenant is found as this would make it a penalty for terminating the contract which you believe is unenforceable. If you refused to pay it, they would have to try and sue you - if they did this I would be inclined to report them to trading standards or their regulator for trying to impose unfair contract terms.

Customer: replied 8 months ago.
Hi Alex,Hope you've had a nice week.Thank you for your advice, you've been most helpful. I've written to the agent with the above argument but I suspect they won't fold immediately. If necessary, would it be possible for you to communicate directly with the agent? If my initial communications with them fail, I believe your arguments will be better founded and would resolve the situation more amicably and quickly. Of course the £44 fee would be paid for your time.Please let me know your thoughts.Kind regards,Toby
Expert:  Alex J. replied 8 months ago.

Hi thank you. Please do not hesitate to contact me with any further information on this thread. In the mean time I would be most grateful if you would rate my answer? Kind regards AJ

Alex J., Solicitor
Category: Property Law
Satisfied Customers: 3557
Experience: Two years conveyancing experience.
Alex J. and other Property Law Specialists are ready to help you
Customer: replied 8 months ago.
Hi Alex,Hope you've had a nice weekend. (I've provided feedback to your response now, so hopefully you've been compensated).I've been in contact with the agent and advised them that they cannot enforce the charge, but they are now making the claim that the £4,000 is for work they have already done. This claim seems tenuous and I don't believe this to be true. Would this claim need to be justified in court? As I don't think I can refute this.Also, is there an upper limit on the costs of re-marketing? I'm worried they'll stake a claim that the £4,000 could be used as re-marketing fees.Lastly, can the agent refuse to let me out of the property? I won't be able to pay next month's rent if I'm forced to stay. So I ideally need to leave as soon as possible.Kind regards,Toby
Expert:  Alex J. replied 8 months ago.

Hi, Thank you. The landlord can refuse to let you sublet the property if no such right exists in the lease, you would need the landlords consent. If they have said £4000 is for work done, have they said what work has been done? If they re let the property they will get two lots of commission making the charge to you just a penalty.

Customer: replied 7 months ago.
Hi Alex,Apologies for the delay in getting back.They've refused to justify the costs for work done. However, the contract does state that the fee is to 'reimburse letting commission' so I'm convinced that it's a penalty. However, the agent has now refused to waive the fee which seems to have left me with three choices, which make me feel rather trapped: stay in the flat (which I can't afford), pay the fee, or sue them.I really can't stay put, so I need to take some form of action. I have no real idea how to initiate legal proceedings, and I'm not sure that it'll be cheaper than simply paying the fee. Could you please advise what the best next steps may be? I'd rather not initiate legal proceedings, but I feel this may be the only way to avoid the fee.Kind regards,
Toby

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