Former Propertymark president Greg Tsuman has warned that confusion surrounding the Government’s proposed Renters’ Rights Bill is already destabilising the private rental market, with landlords increasingly facing requests from tenants to quit fixed-term tenancies early.
The practice, known as an early surrender agreement, enables tenants to exit fixed-term contracts – which lack a break clause – without paying rent for the remainder of the term.
While legal under current legislation, these agreements are now becoming more frequent, driven by what Tsuman describes as a “misunderstanding” among tenants who believe the Renters’ Rights Bill is already in force.
The Bill, intended to replace the Conservative government’s earlier Renters’ (Reform) Bill, includes significant changes to tenant rights.
These include the abolition of Section 21 ‘no-fault’ evictions, the introduction of a Decent Homes Standard, and an extension of Awaab’s Law to private rentals. Crucially, it also proposes an end to fixed-term tenancies, allowing tenants to leave with just two months’ notice, without needing to negotiate early termination.
LEGALLY BINDING
Until the legislation passes, however, fixed-term agreements remain legally binding unless both parties agree to an early surrender.
Tsuman (main picture) says many landlords are already seeing a rise in such requests – and facing increased financial and legal exposure as a result.
“Because the Renters’ Rights Bill means that any tenant can leave a fixed-term tenancy with two months’ notice, this may give tenants more freedom of movement without any fees, but it will also increase landlords’ costs.
This could then push more landlords out of the private rental sector because it is yet another cost they would need to consider, alongside how much rent they are going to charge. This could then lead to fewer properties for tenants to rent.”
APPROACH WITH CARE
He cautioned landlords to approach early surrender agreements with care, especially as fixed-term tenancies may soon be abolished altogether.
“In the meantime, there must be a valid reason why landlords may want to waive their rights before they lose their rights. For example, if a landlord is selling in the future, it may suit their plans to agree to an early surrender agreement.
Agreeing to an early surrender increases their risk of getting fined, experiencing loss of revenue, and additional expenses which they may not be able to cover. We have seen tenants turn on their landlord as soon as the early surrender agreement was signed.”
He adds: Once tenants are no longer contractually bound, some may feel emboldened to act unreasonably or even make threats.
“It’s a good reminder to document everything and, where possible, ensure mutual surrender terms include clauses about post-surrender conduct or settlement of disputes.”
TENANT FEES ACT
Landlords’ legal risks are compounded by the complexities of the Tenant Fees Act 2019, which bans most charges to tenants in England and limits what landlords and agents can recoup.
While the Act allows fees for tenancy surrender, ambiguity around what constitutes a “permitted payment” has led to growing caution among landlords.
A recent First Tier Tribunal ruling found that charging early-exiting tenants for lost rent and agency fees constituted a prohibited payment under the Act – even when the early exit financially benefitted the tenant.
SIGNIFICANT FINES
Tsuman says: “A landlord putting forward an early surrender agreement even if this is financially better for the tenant than holding them to the existing contract, could land them with a significant fine and an inability to recover their costs, and that is the unintended consequence of the Tenant Fees Act.”
He adds that the absence of definitive guidance from regulators or government has left landlords navigating a legal minefield, potentially exposing them to disputes and enforcement action.
As policymakers push forward with reforms aimed at improving tenants’ rights, Tsuman’s comments highlight the growing operational and financial pressures on private landlords – and the risks of legislating without clear, enforceable guidance.
