Adjudication Digest: "Toodle-lieu!" A dispute over rent in lieu of notice

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Mike MorganThe Adjudication Digest takes a recent decision by a TDS Adjudicator and sets out the reasoning behind the decision. The aim of these Digest reports is to help tenants, landlords and agents better understand how we make our adjudication decisions. The names of the landlords and tenants involved have been removed and this is only a brief summary of the dispute.

This month’s case looks at a dispute over a claim made by a landlord against the tenants’ deposit for rent in lieu of notice.

Amount of deposit in dispute: £333.30
Dispute initiated by: Tenant
Award made: 
Tenant
 £333.30
Landlord £0.00

The landlord and tenants entered into a fixed term assured shorthold tenancy agreement for the period from and including 26 September 2014 to and including 25 March 2015.  The landlord provided a signed tenancy agreement which contained a clause requiring the tenants to provide a minimum of one month’s written notice to the landlord in the event the tenants wanted to vacate the property at the end of the fixed term.

The tenants left the property on 25 March 2015, the last day of the fixed term, without giving notice to the landlord.  The landlord argued that due to the failure by the tenants to give the required notice this meant that he was entitled to claim a deduction from the deposit in lieu of one month’s rent.

In this case the Adjudicator noted the clause within the tenancy agreement; however the tenant of a fixed term assured shorthold tenancy is entitled to end the tenancy by giving the landlord vacant possession at the end of the fixed term.  In general, no notice of termination is necessary, unless the term initially granted gave rise to a contractual, rather than a statutory periodic tenancy.  As the tenants gave vacant possession at the end of the fixed term, the tenancy – and with it the tenants’ liability to pay rent - ended on the last day of the fixed term.  No award was made to the landlord for the rent claimed.  The tenants were however in breach of their contractual obligation to provide one months’ notice – the remedy for which would be compensation, which did not form part of the landlord’s claim.

So what are the key points here?

Whilst it is not unreasonable for a landlord to ask a tenant to make their intentions known a month before the tenancy ends (to ensure that the landlord has sufficient warning of the tenant’s intention to leave, and to provide an opportunity to begin looking for a new tenant in good time to reduce the risk of the property being empty for an extended period) this does not create a liability to pay rent if notice is not given.

Any claim for compensation would be for the amount that would put the landlord back into the position he would have been in if the tenants had served the required notice.  The landlord has an obligation to take reasonable steps to keep losses to a minimum, for example by checking with the tenants before the end of the fixed term whether they intended to stay.  As in all claims for compensation, the burden of proving the loss rests on the claimant.  So, the landlord would need to show not only that the tenants did not give notice of their intention to vacate, but also that this failure caused financial loss.

In summary the tenants were not liable for payment of rent beyond the fixed term but may have been liable to a claim for compensation for breach of contract, if the landlord could show that the tenants’ failure to give notice resulted in loss and the deposit clause within the tenancy agreement made provision for such a claim.

 


Posted by Michael Morgan, Director of Dispute Resolution on 14 June 2015

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