Executing AST Break Clauses Correctly

Understanding and correctly executing a break clause in an assured shorthold tenancy (AST) is crucial for landlords and tenants. This article focuses exclusively on break clauses within fixed-term ASTs in England and Wales.

What is a Break Clause?

A break clause allows the landlord, tenant, or both to terminate the tenancy before the fixed term ends under certain conditions. These clauses are predominantly found in fixed-term ASTs and do not apply to periodic tenancies.

Key Points to Consider

• Timing: Break clauses are valid only during the fixed term. Standard procedures apply once the fixed term ends and if the tenancy becomes periodic.
• Clause Wording: The specific wording of the break clause is vital. Some clauses may require notice on a particular day, while others specify a minimum tenancy period before activation.
• Section 21 Notice: A Section 21 notice (form 6A) can activate a break clause, adhering to the clause’s terms, such as notice period.
• Service of Notice: Follow the tenancy agreement's stipulated methods for notice delivery, such as registered post or personal delivery.

How to Exercise a Break Clause

Tenant’s Perspective

Tenants must adhere to the break clause's wording, including notice form and length. Any deviation might invalidate the notice, though minor errors may be overlooked if the notice’s intent remains clear.

Where there are joint tenants, all tenants must serve the break clause to be valid unless the tenancy expressly says otherwise.

Landlord’s Perspective

Landlords can use a section 21 notice (form 6A) to activate a break clause to end a fixed-term AST, and there is no need to issue a letter enforcing the break beforehand - Aylward v Fawaz [1996] 29 HLR 408 CA. However, it's essential to note that activating a break clause transitions the fixed-term tenancy into a periodic tenancy, after which standard procedures apply for regaining possession, including, for example, applying to the court using the accelerated possession procedure using form N5B within six months of when the notice was served (or four months from expiry if the rental period is greater than two months).

Legal Considerations

• Fairness: Break clauses must comply with consumer protection law. Unfair terms, such as clauses favouring only one party, might be invalid.
• Conditions: Any conditions attached to the break clause, like maintaining property standards or rent payments, must be strictly followed.
• Joint Tenancies: All joint tenants must agree to serve a notice under a break clause unless specified otherwise in the agreement.
• Expiry date of the notice: A break clause may contain a requirement to expire on a specific day, in which case, the notice must comply despite the usual rule that section 21 does not have to expire on any particular date.

Practical Steps for Serving Notices

When serving a notice, accuracy and adherence to prescribed methods are crucial. This includes:

• Verifying Details: Ensure all details, mainly names and dates, are correct.
• Multiple Copies: Retain a copy for your records and provide copies to all parties involved.
• Expiry Date: Add a buffer period to the notice's expiry date to accommodate postal delays (but keep in mind the terms of the break clause).
• Signature: The landlord or agent must sign and date notices. Digital signatures are acceptable.

Conclusion

Effectively activating a break clause in an AST requires careful attention to the tenancy agreement's terms and adherence to legal and procedural guidelines. Landlords and tenants must understand their rights and obligations to ensure smooth and lawful tenancy termination.