This is a hands-on guide to one of the trickiest problems landlords encounter: when tenants break the terms of their contract by suddenly leaving the property, stopping rent payments without properly terminating their tenancy.
Knowing your options will help you resolve this scenario quickly, letting you move on to finding your next tenants without wasting time or money. We’ll also show you how to proceed when a solution isn’t possible and the tenant breaks the contract without any plans to engage with you, the landlord.
Tenant Breaking Contract, Leaving the Tenancy Early and Not Paying Rent
Let’s look at two related scenarios first so we fully understand what breaking the contract means. The first scenario is the tenant not paying rent (arrears). The second is surrendering the tenancy.
Rent arrears and Section 8 evictions
The most common and feared way a tenant can break the terms of your tenancy agreement is for them to stop paying the rent. The tenant builds up arrears while continuing to inhabit the property. In this situation, landlords can use their Section 8 eviction powers to repossess the property and evict the tenant. We have written a dedicated guide on how to serve a section 8 eviction notice here.
Surrendering the tenancy
But an even trickier situation for landlords is where the tenant stops paying rent and also appears to abandon the property, leaving suddenly and without much communication, so that their intentions are unclear.
The first thing to do, of course, is to try and contact the tenant and find out their intentions and situation. You may be able to help them. Often they will not be able to afford the rent anymore.
If they are unable to pay the rent, it might be sensible to mutually surrender the tenancy with a written agreement, so that you can start searching for new tenants as soon as possible. This will allow you to avoid lengthy and costly court evictions. This offer might be enough for them to get back in touch with you and allow you to formally end the tenancy, so you are on sound legal footing to create a new tenancy with new tenants in the property.
Sometimes, however, it won’t be possible to contact the tenant: they will have vanished without trace. This scenario is called abandonment and it leaves you in a tricky spot — but there are solutions. Learn more about these ‘implied’ surrenders.
What to Do if Your Tenant Breaks the Contract
Now we’ve looked at these related scenarios, let’s define breaking the contract. This is when a tenant makes it clear, either through their behaviour or by telling you their intentions, that they will no longer honour the tenancy agreement you both signed at the beginning of the tenancy.
They may inform you they are moving out during the tenancy’s fixed term, and will no longer be paying rent. They may simply stop paying rent and not reply to your messages. When you visit the property, there may be no sign of them, as in the abandonment scenario above.
Here is a step-by-step guide on how to deal with tenants who break the contract in this way.
1. See if a small amount of support or help can save the tenancy
Sometimes, the tenant will feel like they have to move out urgently because of some pressing issue that they are unable to resolve, but which you as the landlord might be able to help. If you can save your tenancy by making a few concessions or offering some help to your tenant, it is usually worth doing it — especially if they have been a good tenant up to this point.
For example, the tenant may have lost their source of income and feel like they cannot support the burden of their rent payments each month. A temporary rent reduction may help them through to resolving their income issue, and save you having to find new tenants.
2. Remind them of their legal obligations and ask them to find a replacement tenant
A common scenario is that respecting the terms of the tenancy is no longer convenient for the tenant; perhaps they have found a new job in a new town, are moving in with their partner, or are dropping out of university.
In these scenarios, it is best to begin by simply reminding the tenant of their legal obligations. They signed a contract requiring them to pay rent for the duration of the fixed term. They may have guarantors who could be affected by them breaking the contract. Sometimes this will be enough to make them reconsider.
It’s good to offer both carrot and stick. You could make them an offer such that if they find a tenant to replace themselves on the tenancy, then they can be released from the tenancy agreement early. This means you won’t have a void period while you search for a new tenant. While the tenant is under no obligation to find their own replacement, they may accept this deal if it helps them avoid the negative consequences spelled out in the next step.
3. Spell out the negative consequences of what they are planning to do
Breaking a contract has some bad consequences that tenants should be reminded of. Doing so may cause them to reconsider, or at least to come to an agreement with you about how to formally end the tenancy without them simply walking away.
Firstly, unless you come to an agreement, they will owe you any rent that is due until the tenancy is terminated. That can add up to thousands of pounds of rent, and you will be entitled to pursue them for this money through the courts. A county court judgement would usually have a serious negative impact on their credit score.
Another negative consequence is that you will not give the tenant a good reference when they apply for their next place to rent. This may not be a big issue for them, depending on the kind of housing they are moving on to.
Finally, you can remind the tenant that you are permitted to claim money from their tenancy deposit and use it to pay arrears of rent. That means that if they break the tenancy, they will stand to receive none of their deposit back.
4. Decision time: cut your losses or use legal action
If you have gone through the above steps, but the tenant is still being uncooperative, uncommunicative or showing no desire to end the tenancy through a compromise (such as staying in the property until you can find a replacement), then you must make a decision.
Your first option is to cut your losses by accepting that the tenant has broken their contract and left you in the lurch. This allows you to start looking for a new tenant and minimise the void period in which no tenant is paying the rent and the property is empty. You can use the outgoing tenant’s deposit to cover rent arrears and any property damage, and you at least know where you stand and will not be relying on anyone else to resolve the situation.
The tenant will have “gotten away with it”, but it doesn’t pay to take being a landlord personally in these situations. If cutting your losses makes the most pragmatic and financial sense, then you should do it, even if you feel angry or hurt by the tenant breaking your agreement. If you are in a periodic tenancy, as opposed to within a fixed term, then it will usually make most sense to cut your losses at this point, since the tenant can end the tenancy with only a month’s notice, meaning any rent arrears owed are not likely to be worth pursuing (and may even be covered by the tenancy deposit).
Your second option is to demand that the tenant pays the rent they owe up until the point of the tenancy being terminated. This could conceivably be a large sum and may be worth pursuing, although it is important to note that under the Tenant Fees Act 2019, if the tenant wishes to end the tenancy early, they are only liable to pay reasonable costs and damages.
If you are claiming the rent is owed for the duration of the fixed term, then this must be on the understanding that the tenancy still exists. Just like with any existing tenancy, you are not permitted to enter the property without the tenant’s permission, nor to conduct viewings or move new tenants in. To do so would be to imply the previous tenancy is over, and therefore to forgo your claim to owed rent.
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5. Move on and find new tenants
Whichever of the above two options you choose, at some point, you will have to move past the episode and find new tenants again. Learn whatever lessons you can from what happened, and try to shore up your landlord processes to protect yourself against it happening again.
One thing you can do to put yourself in a better position in future is to take out rent guarantee insurance. This is a policy which pays your rent for you if the tenants stop paying (as long as you follow the terms of the policy).