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Remus2004, Barrister
Category: Property Law
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Experience:  Over 5 years in practice.
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Question about tenancy agreement: Have a standard AST for

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Question about tenancy agreement:

Have a standard AST for 24 months with a break at 12 months if two months notice is served.

AST started on 5 Oct 2013 and runs to 5 Oct 2015. I've just served informal notice (early, I know but wanted to give the landlord advanced warning) saying we will be leaving on 5 Oct 2014 and he said I would have to pay a 'penalty' for early termination, set at 8% of the entire annual rent. He referred me to the 'Termination' clauses in the AST, copied below:

1. If the Tenant shall desire to determine the tenancy hereby or created at or at any time after the end of the first 12 months thereof, and shall give the landlord not less than two months notice in writing of such desire, servable not before 5th August 2014, notice cannot be served between 8th August 2014 and 15th January 2015 and shall be up to the time of such determination pay the rent and observe and peform the agreements and obligations on the Tenant's part herein before reserved and contained, then immediately on the expiration of such notice the present tenancy and everything herein contained shall cease and be void, but without prejudice to the rights and remedies of either party against the other in respect of any antecedent claim or breach of obligation.

2. If the Tenant shall determine the tenancy hereby created pursuant to the provisions of clause 8.1 above, then the tenant shall on demand pay the landlord a penalty equal to 8% of the annual rent but based on the ratio that the unexpired term of the tenancy bears to the length of the period from the commencement of the term, to the date of which the notice of determination takes effect. Any rent paid in advance for any period after the explanation of such notice shall be returned to the tenant after deductions for any costs referred to above.

Will I have to pay this penalty for breaking at 12 months? And what happens if I don't pay, can he keep my deposit?

Many thanks.
Thank you for your question. My name is ***** ***** I will try to help with this.

The short answer is that it depends but probably not.

Clearly this penalty is due under the contract.

You do have a challenge to it because it appears to me to be no more than a fine for terminating early which is void under UCTA.

However, the practical reality is that however brilliantly you argue that point the landlord is not going to agree with you.

He probably will make deductions from your deposit and you could complain to the scheme if he does and they may or may not uphold it.

If that does happen then you can only recover by suing at the Small Claims Court but, overall, I think you would probably win.

Can I clarify anything for you?

Customer: replied 3 years ago.

Hi, thank you for the reply.


UCTA = Unfair Contract Terms Act?


If I were to hold back the last two months rent to cover my deposit and 'fine', could he then come after me at the Small Claims Court? Or is it simpler to pay in full then go the scheme to try and get my deposit back if he withholds it?


What exactly does the deposit scheme do?


Thank you.



Yes, unfair terms and contracts act.

If you refuse to pay the last two months then he could seek CCJ against you and you wouldn't have a defence really.

From the point of view of your credit rating it is better to pay and then sue to recover if you need to.

To be wholly honest, I asked myself almost every time I deal with such a case what the deposit scheme does! They should adjudicate upon disputes but regularly they do not and just refuse to release it which assist nobody.
Customer: replied 3 years ago.

Thank you. Last question...the property is the landlord's home, he lives in Switzerland at the moment. If I do need to sue him, would I have to do so in Switzerland or would it have to be at his UK address (which I am renting at the moment)?


You do need a UK address.

I would insist upon one before you sign the AST. There is no point in a contract with a person living abroad.

I suppose arguably you could use your address which is his last known address but I'm not sure that would end well in court.
Customer: replied 3 years ago.

Thanks but already signed the AST. Have been renting since Oct last year.


Hope this doesn't end badly but if it does I only have the UK address of his house (where I am renting) and an address of the agent who are the deposit holders.


When I leave in Oct of this year, I won't be living in his UK house, so can I use that address to sue? And can I add the agents as defendants as they hold the deposit?

Well, then you will have to make the best of it.

If the agent has an address for the landlord then you could always issue against the agents care of the landlord.

I don't think you can use your address because you know he is in Switzerland.
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Customer: replied 3 years ago.

Thanks for the info. Just checked with the agent and as the landlord has only paid the agent for 1yr in advance (not 2yrs), he believes the penalty is invalid - and as they hold the deposit this should prevent no issue.

Thats great.

Glad it worked out.