More and more landlords are opting to reach agreements with their tenants to vacate a property in exchange for a financial incentive rather than endure the stress and cost of formal court action.
Commonly referred to as ‘Cash for Keys,’ this approach is
gaining momentum, especially ahead of the Renters Rights Bill. But is it really
the easy solution it appears to be? Let’s explore the pros and cons and,
crucially, how to do it correctly.
What is Cash for Keys?
Cash for Keys is not a new concept. It has long been used by
landlords, agents, and mediators to encourage tenants to vacate a property
without the need for court proceedings. However, the newly coined phrase itself
is gaining traction across social media, sparking discussions about its
legitimacy and effectiveness.
The process is straightforward:
- The
landlord and tenant agree on a move-out date.
- The
tenant signs a Deed of Surrender, formally ending the tenancy.
- The
landlord pays the agreed incentive once possession is returned.
This arrangement avoids the lengthy, costly and stressful
legal process associated with possession claims, allowing both parties to move
on with minimal stress.
But is it really that simple? Let’s look at where things can
go wrong.
Potential Pitfalls of Cash for Keys
1. Paying the Incentive Too Soon
One of the biggest mistakes a landlord can make is paying
the tenant before they have vacated. The payment should always be made only
when the tenant hands over the keys. With modern banking apps, an instant
transfer can be completed on the doorstep once possession is confirmed.
2. Tenant Doesn’t Move Out
While rare, there are instances
where tenants accept the payment but doesn’t leave. This is why having a signed
Deed of Surrender is crucial.
Under Section 18 of the
Distress for Rent Act 1737, once a tenancy has legally ended, a tenant who
remains in occupation is liable to pay double rent.
However, landlords must
communicate this early and ideally include it in the Deed of Surrender to deter
non-compliance.
3. Claims of Harassment or Illegal Eviction
Some landlords have reported that solicitors have warned
them Cash for Keys could constitute harassment or illegal eviction. However,
this is misinformation. As long as the agreement is mutual and
free from coercion or threats, it is entirely legal. Harassment and
illegal eviction claims arise when a landlord forces a tenant out unlawfully,
such as by changing the locks or cutting off utilities. A properly executed
Cash for Keys agreement is a voluntary surrender, not an eviction.
4. Councils Advising Tenants Against It
Another common issue is local councils advising tenants not
to accept a Cash for Keys offer, claiming they will be deemed intentionally
homeless and ineligible for housing assistance.
This demonstrates a misunderstanding of homelessness
law. A tenant who agrees to end a tenancy because it is no longer affordable or
suitable is not intentionally homeless. Spending rent on non-essentials,
knowing eviction will follow, is intentional homelessness—but accepting a fair
financial settlement to leave is not.
Why Cash for Keys is More Relevant Than Ever
With the abolition of Section 21 on the horizon,
courts are expected to become overwhelmed with possession claims.
At the same time, councils will struggle to cope with an
increase in homelessness applications.
For landlords and tenants alike, Cash for Keys presents a
practical alternative:
- For
landlords, it avoids legal fees, court delays, and the uncertainty of
enforcement.
- For
tenants, it provides financial support for relocation without the
stress of an eviction process.
While Cash for Keys is not without its risks, it remains a viable,
legal, and often mutually beneficial solution when handled correctly.
Ensuring a signed Deed of Surrender, withholding payment
until possession is returned, and clear communication are key to making it
work.
As the rental landscape shifts, expect to hear more about
Cash for Keys—because for many, it may soon be the most practical way forward.
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