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Miniature house and rental contract

What is a Break Clause?

24 June 2020 Simon Banks Read time: 3 min
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Simon Banks

It’s not me; it’s you. I think we need to take a break. Or, in the words of the iconic Ross Geller, “WE WERE ON A BREAK”. Sometimes things just don’t work out. It happens in relationships, and it can also happen with the home you’re renting.

Sure, you thought it was love at first sight from the moment you laid your eyes on that cute two-bedroom apartment with a south-facing balcony. But things didn’t quite work out how you expected, and now you’re thinking about moving on to pastures new despite only living there for a few months.

Getting out of your tenancy contract is easy enough when it’s run its course or goes on a rolling periodic. But what happens when you’re right bang in the middle of it? How do you leave the property without incurring legal action from the landlord with whom you signed a 12-month contract?

Enter the break clause, one of the rental market’s best-kept secrets. And we’re here to tell you what it is and why it’s important.

What is a break clause

A break clause is inserted into a tenancy agreement and lets either the renter or the landlord terminate the contract early. Essentially, that means either party can renege on the Assured Tenancy Shorthold (AST) agreement without any implications. From the renter’s perspective, this means leaving the property earlier than the initial length set out at the start of the contract. 

Keys and house cut out

Break clauses are typically inserted at the middle point of a contract. For example, a 12-month long contract would have a break clause at the six-month point, allowing the renter or the landlord to end the AST after six months instead of 12. A 24-month contract would have a break clause after 12 months.

How does a break clause work?

Not all break clauses are the same, with some specifying exactly how you can end an agreement. While others will only require you to notify the landlord or managing agent. Normally, you need to give one month’s notice after the break clause sets in.

The details of how to activate a break clause are clearly stated in the AST. And break clauses can typically be activated at any time once they become active. If your break clause starts after six months, you should be able to activate it at any time after the six months.

Why do you need a break clause?

We all do things with good intentions, but sometimes life can change without much notice. Whether it’s a loss of income or getting a new job in a different city, it can be hard to keep long-term promises – especially when there’s money (monthly rent) involved.

Break clause in a rental agreement

Having a break clause adds an extra layer of security for both you and the landlord if unforeseen circumstances arise. The overwhelming majority of tenancies last for the duration of the AST and longer, but it’s good to safeguard yourself with a break clause just in case the unexpected happens.

Are break clauses mandatory?

There’s no legislation stating that break clauses are mandatory, and in some cases, they are swapped out for flexible tenancies that don’t hold renters to the duration of a contract. During the processes of renting, you should check the AST to see if there is a break clause inserted.

If you find that no break clauses is included and would like one added, ask the landlord or the managing agent overseeing the move to see if it's possible to insert a break clause. The landlord doesn’t have to agree, but there’s every chance they will be flexible to your suggestion.

Flexible renting with Build-to-Rent

As the private rental market grows in numbers, so too does expectation from modern-day renters. With increased expectations comes more options. One of those options is flexible contracts in Build-to-Rent communities.

Build-to-rent community

Short, medium and long-term lets are all on the table, allowing you to pick the type of contracts that works best for you. Flexible living is key and is becoming a more prominent feature that meets the changing needs of renters.

The future of renting

Break clauses are currently an essential component in the rental ecosystem if you want to protect yourself against the unknown. But as the market evolves, a flexible rental strategy becoming the norm is unavoidable and will offer renters more choice for how they live, as well as where they live.

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