Can tenants terminate their tenancies early due to COVID-19?

Many tenants in the private rented sector, particularly students who have other accommodation outside of term-time, are asking landlords whether they can terminate their tenancies early in response to the coronavirus outbreak.   This blog looks at the legal position on terminating tenancies early and what landlords should be considering when dealing with such requests from their tenants.

Force Majeure

Force Majeure is a contractual term mostly found in commercial contracts allowing parties to exit or delay the performance of the contract when a specified event that is beyond the parties control occurs. These events are usually an act of God, natural disasters, fire, flood, war, acts of terrorism etc. Most contracts will specify what the specified event may be allowing the parties to exit/delay performance of the contract. However, in the context of residential tenancies, you are less likely to find a force majeure clause allowing parties to end their tenancy agreement. Therefore, unless your tenancy agreement has a force majeure clause your tenants will not be able to rely on this.

Frustration

In such cases your tenants may wish to consider whether it is possible for them to rely on the common law doctrine of frustration. Frustration allows a contract to be discharged if unforeseen events occur that will make performance of the contract a) impossible b) illegal or c) if the central purpose of the contract has changed. If there has been an event frustrating the contract, then the contract will end, and parties will be released from the contract.

Most residential tenants will not be looking to end their tenancies during this turbulent time. However, student tenants may wish to end their tenancies early to return home to their parents and/ or back to their home countries during the pandemic. However, where they are part-way through a fixed-term contract, they are unlikely to be able to rely on frustration or a force majeure clause to end their tenancy early. This is because their decision to move back home is a personal decision and the accommodation is still available for them. The fact that university campus buildings may be closed, and teaching may have temporarily ceased does not affect the performance of the tenancy. Some landlords may be willing to negotiate with the tenants to agree rent suspensions for a specified period, rent reductions or a change in the way in which rent is paid. Many landlords may be reluctant to release students from their tenancies early as they will find it difficult to re-let their properties during the current crisis.

In cases, where accommodation has not been taken up yet by a student who is abroad the situation may be different. For example, international students who are unable to travel or obtain the necessary study visas as a result of coronavirus disruption may be in a stronger position to argue frustration. However, the threshold is a high one and each tenant’s individual circumstances would need to be considered.

So, are there any alternative methods that can be used to end tenancies?

Break clauses

If you have an Assured Shorthold tenancy agreement which is currently in its fixed term you may wish to check if your tenancy agreement has a break clause. A break clause may allow your tenant to end the tenancy before the end of the fixed term by giving notice in accordance with the break clause. A well drafted agreement should set out when the break clause can be exercised, the length of notice required, the form of the notice and the method of service on the landlord. It is important that the notice complies with the requirements in the tenancy agreement otherwise it may be not be valid and the tenancy will not terminate.

Express Surrender

It is always possible for parties to agree to end the tenancy at any time by way of a surrender. Express surrender needs to be by way of a deed of surrender which will formalise the agreement and release both parties from their obligations. If you are agreeable to an early release of a tenant, then you should formalise this arrangement by way of a deed of surrender.

If you are unsure of what you can do and seek legal advice, then get in contact with our legal team who will be happy to advise you further on your options.

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*