Tenants Not Liable for Landlord Losses: Tribunal Ruling

A judge has ruled tenants are not responsible for landlord losses if they leave a rented home early.

First-Tier Property Tribunal judge Loma Tagliavini heard Marcus Thomson and Sophie Rolph rented a flat in Wentworth Street, Shoreditch, East London, but decided to leave five months into the tenancy.

Landlord Lazlo Biro let the flats through agents Winkworth Shoreditch with a tenancy agreement that stipulated the departing tenants were responsible until new renters moved in.

The agreement was to run for 24 months, with a 12-month break clause. The contract stated the tenants would pay seven months' rent, landlord costs, and compensation if the property were let at a lower amount than the couple was paying.

The bill from the letting agent totalled £3,577.

Bill wrongly calculated

Thomson and Rolph argued the claim was excessive and included payments prohibited under the Tenant Fees Act.

The agents reduced the payment demanded to £3,127, agreeing that the management agent's costs element of the bill was wrongly calculated.

However, the tribunal ruled that the departing tenants were not liable for any loss on rent incurred by the landlord.

The judge said: “The departing tenants cannot be held responsible for the alleged changes in the letting market. Arguably, had the landlord been able to let the subject property for more than £2,800 a month, they might argue that they should have been entitled to receive the difference. In any event, the loss of rental income does not represent a loss to the agent.”

The court ordered the letting agents and landlord to reimburse the tenants £2,252, representing the letting agent bill less charges banned under the Tenant Fees Act.

Read the tribunal decision Thomson and Rolph v Winkworth Shoreditch and Lazlo Biro.

Fees for leaving a tenancy early

Landlords can retain a deposit or charge a tenant for breaking a rental agreement by leaving early, but they should only keep any costs they have incurred.

For example, landlords cannot charge a tenant for keeping a pet but can send a bill if the pet damages the rented home.

The landlord can make a charge if a renter leaves before the end of the tenancy but can only demand rent until the date new tenants move in or when the tenancy expires, whichever is sooner.

The tribunal case clearly stated the landlord cannot claim compensation if the incoming tenant pays less rent than the departing tenant. The judge determined the clause in the tenancy agreement covering this point was unfair under consumer protection laws and should be ignored.

Tenants are responsible for the rent and charges they would have incurred while renting a property they left early. These would cover amounts such as council tax, service charges, a TV licence, and telephone or broadband charges.

More information: Official guide to the Tenant Fees Act.