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Exercising 6-month Break Clause - unclear on whether I have to pay compensation

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411 views 1 replies latest reply: 12 January 2016
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Tenant

Hi all,

I have rented a property starting from 15 September 2016, and the tenancy agreement was for 12 months. I paid 6 months up front, and there is a break clause at the end of the 6 months. I have decided to end the tenancy at the end of the 6 months, which is 16 March 2016 – however, upon reviewing the tenancy agreement, i am not too sure whether I have to pay some form of compensation in this case.

I have attached the exact wording from the agreement regarding the break clause – if someone could read the wording and tell me what exactly I have to pay/do at the end of the 6 months (besides serving notice on 60 days before), it would be great!


7.1 If the Tenant shall desire to determine the tenancy hereby created at the end of the first 

six months to expire on 15 MARCH 2016 and shall give to the Landlord not less than 

TWO MONTHS previous notice in writing of such desire and shall up to the time of such 

determination pay the rent and observe and perform the agreements and obligations on 

the Tenant’s part hereinbefore 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.

7.2 If the Tenant shall determine the tenancy hereby created pursuant to the provisions of 

Clause 7.1 above then the Tenant shall on demand pay to the Landlord a proportion of 

the legal costs licence fees and letting agents fees incurred by the Landlord in connection 

with the creation of the letting such proportion to be a calculation 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 expiration of such notice shall be returned

to the Tenant after deduction of any costs referred to above.

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Administrator

Hi Albert

Usually, a break clause will end the contract and there should not be any fees to pay other than the fees for the check out inventory.

This does seem to indicate that there may be ‘the legal costs licence fees and letting agents fees’ to pay if you do this but of course it doesn’t state how much. I’m not a lawyer but as far as I know you would not have to pay any compensation – that’s the whole point of the break clause, that it lets you out of the tenancy without having to pay compensation/rent to the full term.

So the only extra to pay would be those ‘legal costs licence fees and letting agents fees.’ I would imagine this would be less than £100 but even if it’s not the agent would still have to justify anything that they want to charge you for – they can’t just make up fees and demand them from you. If you didn’t agree with those fees then you’d be entitled to question them. If they tried to take the fees from your deposit then you could raise a dispute with the deposit protection scheme that holds your deposit.

Just make sure that you give notice properly under the break clause – i.e. two months before the break clause date.

Alex

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