Can students demand break clauses?

by Property118.com News Team

9:35 AM, 26th August 2020
About 3 months ago

Can students demand break clauses?

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Can students demand break clauses?

UNIVERSITY students believe break clauses should be automatically included in tenancy agreements to protect them financially in the event of a second wave of coronavirus, according to a survey conducted by websites Money Magpie and Save The Student.

The break clause would lapse the rental contract, meaning students required to return home if their university was to close would not be liable for any remaining rent under the tenancy agreement, and landlords would be able to re-let the property.

Paula Haverkamp, a paralegal who specialises in landlord and tenant issues at Nelsons, discusses what landlords should do if students ask for break clauses to be included in their accommodation contracts.

What is a break clause and can students demand one to be added into their accommodation contracts in light of Covid-19?

“Students who rent from a private landlord will have an Assured Shorthold Tenancy (AST) agreement, which is a binding contract, meaning they will be liable for the rent until the fixed term expires.

“If the contract contains a break clause and notice is served in accordance with one, the student’s obligation to pay for the full term of the tenancy will fall away. In other words, this will allow for early termination of the tenancy.

“Usually a break clause will not take effect unless the student has been in occupation for a minimum of six months. However, this may differ from contract to contract. A student can ask for a break clause to be inserted and caveat it in relation to a second wave of Covid-19, but a landlord does not have to agree.

“If a student is in university-owned accommodation, they will need to seek advice from their university in relation to a second wave. However, for students who rent privately as set out above, any agreement entered into is a binding contract. Students will need to negotiate with the landlord if they wished to end the contract early.”

If there is a second wave of coronavirus and a student moves out of their accommodation before the end of the tenancy and refuses to pay their rent, what should landlords do?

“If a student vacates early and refuses to pay their rent due to Covid-19, a landlord is entitled to bring a claim against the student for non-payment of rent. When renting to students, most landlords will insist there is a guarantor. If this is the case and the student does not pay the rent, the guarantor will also be liable for the rent. 

“If the landlord issues court proceedings and obtains a judgment for the arrears, and the judgment is not satisfied within 30 days, the student and their guarantor will have a county court judgment against them.”

In relation to coronavirus, is a student able to end their contract early because of a ‘force majeure’?

“Sometimes, tenancy agreements contain a ‘force majeure’ clause, which dictates what will happen in the event that either party cannot perform their obligations under the contract due to circumstances out of their control. While Covid-19 may be a force majeure event, it is unlikely to stop a tenancy from continuing.”

What should landlords do if a tenant is unable to pay rent due to coronavirus disruption?

“If tenants are unable to pay their rent due to Covid-19 disruption, they need to speak with the landlord immediately. If they are working and are on a reduced wage, they will need to evidence this to the landlord, who may agree to a reduction in the rent. Tenants will need to remember that if a reduction is agreed, the shortfall will need to be made up for the remaining months.

“It is worth noting that the government has not introduced specific financial help in relation to Covid-19. Any students who are struggling to pay their rent must contact the university, halls of residence manager, private landlord or letting agent to discuss the matter with them, and to try to reach an agreement.”


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Comments

Ian Narbeth

10:59 AM, 26th August 2020
About 3 months ago

"Usually a break clause will not take effect unless the student has been in occupation for a minimum of six months. However, this may differ from contract to contract. A student can ask for a break clause to be inserted and caveat it in relation to a second wave of Covid-19, but a landlord does not have to agree."

I am not sure if this is the whole quotation but a tenant break clause can operate within the first six months. Similarly the fixed term can be less than 6 months. The issue is that the Landlord cannot terminate the tenancy without reason before six months (putting aside for the moment the moratorium). The lease could have a landlord's break clause but it cannot operate before the expiry of 6 months and the landlord still has to serve a s21 notice. There is little point for a landlord to give a long lease and include a landlord's break. It is simpler to have a six month term and allow the tenancy to become periodic.

I do not understand the reference to "caveat [the break clause] in relation to a second wave of Covid-19". Trying to define "a second wave of Covid-19" will not be easy. Even if you can define it, does this apply only if the whole country is affected or just the area in which the property is? It is really too complicated. Either give a break or don't. Messing around with conditional break clauses leads to massive problems.

Marlena Topple

11:04 AM, 26th August 2020
About 3 months ago

We will not be providing break clauses. However in the event of a second wave we will offer a rent reduction. Surprisingly most of our tenants stayed during the past few months.

Whiteskifreak Surrey

12:53 PM, 26th August 2020
About 3 months ago

We offered a rent reduction of 17% immediately with Covid lock down. Only one group of students expected not to pay at all (Uni's attitude and directions for them). We ended up with taking the whole deposit and a minimal payment, which hardly covered mortgage (but not tax).
I do not think the Uni will release campus students from the payment, as they did in March, they will bankrupt.


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