What Landlords Need to Know About Cancelling an Agreement early?

Tenancies can sometimes be troublesome – but what if you want to cancel the arrangement before it starts? Many landlords may feel dread about the prospect, so it’s important to understand what’s involved in cancelling a tenancy agreement. 

Bit of a warning, most posts on this site are quite clear, binary, explaining legal rules emanating from the Housing Act 1988 (as amended), but today, there is a bit more nuance. What is best? How to achieve the best scenario for all? I think it is called Game theory. The optimimum outcome for all, based on a win/win/win approach as opposed to the win/lose outcome.

Game Theory 

Game theory is a form of maths which is used to understand the strategies of different players in certain situations. It can be used to look at scenarios like auctions, bargaining and pricing, where two or more people have an outcome that relies on each other. Businesses and experts around the world use game theory to understand the best outcome for each individual and for the collective whole. People use game theory for a range of reasons, from economics to politics and psychology. By working out the best decision for each individual involved, the collective outcome is usually the best overall result for everyone.

The Legal Position

The legal position is quite clear – tenancy agreements are legally binding and cancelling them before they start is generally not an option. Although civil law doesn’t usually provide a ‘cooling off period’, which allows either landlord or tenant to change their mind, it’s still important to look for a fair solution.

What Can Landlords Do About Cancelled Tenancies?

Sadly, there’s no one-size-fits-all answer for landlords when it comes to cancelling a tenancy. The reality is often more complicated than the law, so it’s important to find a fair solution that both parties are happy with. Of course, a tenancy agreement can only be cancelled before it begins if both landlord and tenant agree to it. Once you've signed on the dotted line, it's not always possible to backtrack.

But again, as long as both parties agree, it’s possible to negotiate an agreement to terminate the contract before it begins. A major consideration for landlords is what to do with deposits; many tenancy agreements will require a deposit to be paid before their move in date. In this case, the landlord might be within their rights to keep the deposit as compensation. 

Though this request should be done in a fair and proportionate manner. Furthermore, it’s well worth avoiding situations where a tenant is unwilling to move into a property, as this can turn quickly sour. Not only will the relationship between tenant and landlord likely start on a negative footing, but if the tenant does eventually move in, there’s also an increased chance that they’ll vacate the property as soon as their fixed term is up. This can be incredibly costly and disruptive for landlords, so cancellation is almost always preferable.

Do you want a tenant who does not want to be there? Surely that will increase the chances of is being an unhappy relationship.

What Do Landlords Need to Consider?

While seeking to end a tenancy agreement before it begins may seem like the obvious solution for landlords, it’s far from straightforward. Landlords should be mindful of the risks and repercussions before taking any steps to end the agreement.

Unfortunately, landlords can’t always rely on a guaranteed positive outcome; if they and their tenant can’t agree, it could be time to take legal action – a course of action that is more time-consuming and costly than negotiating a mutual solution. The good thing is, many professional landlords have the expertise and the resources to deal with cancelled tenancies.

The best landlords will already be on the lookout for replacement tenants who can move in as soon as the agreement is ended, reducing the amount of time a property is left un-let. The key for landlords is to build and maintain a good relationship with potential tenants; this often pays dividends in the long run, and helps landlords achieve the highest return from their investments.

If you do manage to negotiate a WIN/WIN/WIN outcome, then it needs to be recorded in a Deed of Surrender.

Deed of Surrender

An express surrender is a voluntary agreement between the landlord and tenant that the tenancy will end. It is made by a legally binding document known as a deed, which must be signed by both parties and be witnessed. This document must clearly state that the tenancy is ending with immediate effect. Once the deed is signed and witnessed, the tenancy will terminate.

Download your Deed of Surrender here, to evidence the agreement in case someone changes their moind yet again later!

Final Thoughts for Landlords

It’s clear that tenancy agreements can be troublesome – and cancelling them can be even more upsetting. For landlords, it’s a situation that needs to be handled carefully but assertively.

Before taking any steps, landlords should carefully consider the potential risks and costs associated with ending their legally binding contractual agreements. But, of course, it’s often a much better option than letting a tenancy become an unhappy situation. Negotiating a mutual solution is certainly the best way to go, and many landlords will use their expertise to seek and find new tenants quickly, avoiding any legal action. By looking out for replacement tenants and maintaining a good relationship with them, landlords can ensure they make the best return on their investment.

We can help with two things:

Deed of Surrender

Download your Deed of Surrender here, to evidence the agreement in case someone changes their moind yet again later!

And

Legal Advice Helpine

Our Legal Advice Helpline where you can talk to a real lawyer over the phone about this, or any legal issue anytime. 

It is the best kept secret in the Uk landlord world.

Basically, I have negotiated a deal for our website users to get the same use of the legal helpline that serves the largest legal insurers in the UK.  So you get on a pay as you need basis what others only get when they have massive insurance polices!