The Break Clause and how to use it

Hadaway & Hadaway

It is crucial to know that the content of the lease agreement is for your benefit if you are a landlord or tenant. Make sure you have a clear understanding of a break clause and its application.

For instance, if a break clause is attached to your lease agreement, it means the landlord or the tenant has the right to bring the lease agreement to an end in the early stage. This approach of break clauses is used by tenants who want to bargain for a more beneficial lease term agreement to have a fair advantage over some property owners who wish to preserve their source of income judiciously.

The Letting Market

Landlords have been feeling worried ever since the focus has been on assisting more individuals to purchase their homes; this has brought about a decrease in demand for letting of houses. As the pangs of economic challenges bit harder, more tenants are utilizing the features of the break clause. According to some provisional break clauses, the tenant must have met specific conditions as at the break date, and litigation process will start.

Serving The Notice

There are various types of break clauses, and some of them dictate how the notice must be issued. It may even foist certain conditions on the technique to be utilized while it is being served. It is crucial to note that failure to follow the rules stated in the terms will make the notice invalid. The notice cannot be withdrawn once it has been issued.

If you are a tenant, make sure you do your research by checking the information of the parties in the lease agreement with the Land Registry and Companies House. It is also vital to take a careful look at the details of the lease agreement before signing it. You must make sure if the service provisions of the agreement are compulsory. If you are not sure of the requirements, you can exploit several techniques to issue the notice to the property owner and the agents to protect yourself. Ensure you acquire proof of service of the notice for record purposes.

Landlords are also advised to maintain close relationship with their tenants to forestall an event where a notice will be issued to them, as this will make them have a fair advantage, as well as give them the opportunity to discuss new terms of agreement before it gets too late and prior to the time the renter is no longer staying in the house.

When To Serve The Notice

Several factors will determine the application of the break notice. A break notice can be invoked when a specific time has passed, or there are some particular dates it can be done. This clause should be made clear in the lease agreement and the terms of the notice period should be explicit and clear to the tenants. Occupants of the property should keep a record of the dates in the clause and reconsider their options at least twelve months before the notice period begins.

Try to seek an audience with the audience with the landlord if you are not sure of the dates of the break clause; this will enable you to agree on a date. Do not wait until the last minute before making a move as you can serve several notices if there is a need to do so. Moreover, if your landlord is a company based abroad, you will need to give them more time.

Maintaining an excellent relationship with the occupant of your property as a landlord will offer you an idea if your tenant will take advantage of the break clause if you attempt to increase the rent. This relationship will enable you to decide if it is the best time to raise the price. As a landlord, when you are about to increase the rent, you may have to check for any time limits in the rent review clause that you may need to oblige to if the break date is associated with the review date.

Conditions

Terms of a break clause are found in the tenant’s break clause and can entail essential details like full payment of the rent under the lease agreement. Several litigation cases have been recorded on types of cases such as these, as it should be made clear from the beginning if the tenant is obliged to make payment if the break date falls within quarter days.

It is also essential for all occupants to find out if the lease agreement involves principle rent or have other fees such as interest or value-added tax. Make sure you know your payment history and in the case of late payments, ensure you pay the interest accrued on the late reimbursements. Tenants are advised to receive verification from their landlords that their fees are complete as these facts could be challenged after the break date in the absence of a verified proof. During the negotiation of your lease, make sure your landlord refund payment for the time after the break dates. Landlords should not create a completion statement unless it is stipulated in the lease agreement.

Vacant Possession

The term “vacant possession” does not mean unoccupied in the real sense, it says the personal effects of the tenants have been removed, the keys have been returned, and no occupant is there on the break date. Tenants should make sure they are not using the property during that period or preventing the landlord from using the property. Occupants should be informed of any repair works that must be executed for them to leave the premises and the landlord must also confirm about the kind of work they want to do on the property. Landlords should make sure that the tenant is issued a notice to restore modifications.

Tenants Covenants

The covenants stipulate that the occupant should comply with their rules, especially when the condition of the house is discussed. It is important for tenants to complete a compliance audit with a surveyor that will inform the landlord of any violations of the lease covenants as this will offer you as the property owner to do the needful by repairing it. The landlord is obliged to provide you with a schedule for any repair jobs, and this should be concluded before the break date.

Settlement

A financial settlement may be required ahead of the break date to pay for the repair work and save the tenant from break pre-conditions. It offers certainty that the lease will end on the break date and both parties have to negotiate the repair settlements. It is vital to start the process of settlement early as it will make the last stages of a break more comfortable for the landlord and the tenant.

As most individuals view a break clause as negative, making it explicit and in clear terms will inform all parties involved about their responsibilities and this knowledge will make the process a pretty straightforward one.

The IMF’s Concerns Regarding Household Debts In the UK

Hadaway & Hadaway

The International Monetary Fund (IMF) is an organization that advances financial stability and monetary help, internationally. It promotes international trade, employment, and economic growth. This organization is run by a 189 membership from different countries.

Lately, the IMF has announced a surge in household debt which could very well lead to a financial crisis worldwide. They have stated that this crisis could lead to a negative economic impact.

A recent report said “higher household debt is associated with a greater probability of a banking crisis, especially when debt is already high. A sudden economic shock, such as a decline in home prices could trigger a spiral of credit defaults and debt that shakes the foundations of the financial system.”

This warning from the IMF was first announced after discovering the rising debt that has incurred in the United Kingdom. Since 2007, the levels of household debt dropped in the UK from 150% to 130% but have since risen to 137% over the past few years.

The most recent figures coming from the Bank of England has discovered that British households have unsecured debts of approximately £203 billion from car loans, credit cards, overdrafts, and other types of loans. There is a rising concern that lenders in the UK could lose well over 30 billion due to borrowers who are in debt and having a hard time paying these loans back.

Economist Claudio Raddatz, from the IMF, stated: “Growing debt levels signal risks down the road”. Although some economists believe that extra spending can actually help the economy but over time, spending and debt will lead to risks in the economy.

Economist Nico Valckx of the IMF said “Debt greases the wheels of the economy. It allows individuals to make big investments today, like buying a house or going to college, by pledging some of their future earnings to pay the debt incurred. That’s all fine in theory. But as a global financial crisis showed, rapid growth in household debt, especially mortgages, can be dangerous”.

The IMF has continually warned lenders that the increase in spending and debt is getting well out of control. More households are heading into debt once again which is a reflection of past financial crisis.

They are afraid that lessons of the last financial crisis and the negative impact it had on the economy has obviously not been learned by spenders. Consumers must become more astute regarding their spending and borrowing habits. If households continue on this slippery slope, it will show that people just have not gotten the message.

The IMF’s latest concerns remain to be seen but the increase in household debt could lead to another crisis within the country.

brexit uk law

The Impact of UK Departure From The EU On Family Law

Hadaway & Hadaway

As everything keeps changing with connections between the UK and EU, legislation is taking quite a hit. Who has jurisdiction over who, what decisions will be affected by new legislation both in family law and other financial and personal areas that will be on everyone’s minds. Only time will tell what the final outcome will be.

While the country is still reeling from the EU referendum, we need to take a much closer look at how departure from the EU will impact family law in England and Wales.

Family law is not a stranger in the sense of taking steps to move away from the EU which will take quite a bit of unraveling from the EU legislation. The same can be said regarding many of our other laws. Without a doubt, this will take quite some time and the process will probably drag out for quite some time. Although the long-term impacts of Brexit, or departure of the UK from the EU, may not be fully felt for quite awhile, there are many consequences in regard to future divorces from the EU.

Nigel Shepherd, chair of the family law organisation Resolution, spoke after the referendum was announced. He stressed that the results have created a period of great uncertainty. This has emphasized the uncertainty arising from the fact that family law is essentially linked to the referendum and other jurisdictions.

The EU Legislation

Being in force since 2001, Brussels IIa has been an important part of the EU legislation and offers uniformity and a certainty in recognizing the divorce proceedings in various jurisdictions of the EU. With its absence, Family Court in the UK will need to adopt new avenues for addressing some important areas that will continually pop up in matrimonial proceedings.

As a perfect example, the most significant problem in issuing divorce proceedings will be to consider whether the court you are applying to actually has jurisdiction to accept your proceedings. Even more crucial could be involving multinational couples trying to figure out which court will hear their divorce petition. This is very important because different jurisdictions have to decide financial cases in different ways. Some courts could be seen as more favourable to one party over another. In many cases, there will be a mad dash to issue the petition first to the country that will be most favourable to the spouse. What country has jurisdiction is still governed by the EU legislation.

Bear in mind, in the absence of this important EU legislation, this will lead to even more uncertainty regarding who has the jurisdiction to hear the case. It has been iterated that the courts will have to fill the vacuum with something that would be similar to Brussels II in order to address the situation.

Adding to this, the Brussels IIa allows an order that was created in England to recognised and is enforceable in other jurisdictions. Orders that are commonly affected by the EU legislation includes child custody, other arrangements and matrimonial orders that need to be addressed by the new legislation in order to stay enforceable across the borders.

Keeping agreements made between multinational couples in a divorce are governed by Brussels IIa which allows for a more uncomplicated approach for enforcement across different jurisdictions. The enforcement of these agreements will need to be addressed in light of any new legislation and will have the greatest impact on matrimonial property and who owns what in different countries.

Other Arising Issues

Although family law is not the leading victim of departure from the EU (or Brexit), there will still be a great deal of uncertainty leading up to the formal Brexit while negotiations continue with the EU and this could take a number of years.

In a time of great uncertainty for couples divorcing, there will be even greater anxieties and fears that will arise. On a broader scale, the possible impact of Brexit could lead to an increase of interest rates, a fall in pension values, and the outcome of the property market. All of these situations will also add to many more concerns in what has become a very stressful time.

What’s In The Future

That said, some analysts have suggested that while breaking away from the EU will cause a period of uncertainty, there might be an opportunity to embrace change. By drafting domestic legislation that can provide better laws than what currently exists with the EU might be a positive solution.

The final outcome cannot possibly be known at this time. Couples who are dealing with difficulties are strongly advised to seek out guidance as soon as possible. They need to fully understand the complexities of Brexit and understand the impact that they may experience both on their personal and financial circumstances.

In Conclusion

With the changes of Brexit, there will be many challenges ahead and what courses will be the most positive for family law and many other legislation. Time will tell the final impacts and outcomes and how much anxiety and stress lies ahead. Family law has many challenges yet to be seen. Couples looking for divorces should get counsel in order to understand the changes and how they will be impacted.