Agreed Reletting Charge: A Complete Guide
As a tenant, there are various costs you need to be aware of when renting a property. One cost that often goes overlooked is the Agreed Reletting Charge (ARC). An ARC is a fee charged by the landlord to the tenant when they wish to end their tenancy early and have a new tenant take their place. In this article, we’ll discuss everything you need to know about ARC- from what it is, how it works, and whether it’s legal.
What is the Agreed Reletting Charge?
The Agreed Reletting Charge is a fee that a landlord can charge a tenant if they wish to break their lease early and move out. Essentially, it is a penalty charge for the tenant to terminate the rental agreement before the contract’s end date. This charge is meant to cover the costs the landlord incurs while trying to find a new tenant to replace the outgoing one.
How Does the Agreed Reletting Charge Work?
The Agreed Reletting Charge is typically outlined in the tenancy agreement, along with the other terms and conditions of the lease. If the tenant wishes to terminate the contract early, they are required to inform the landlord in writing. After receiving notice, the landlord will then work to find a new tenant to replace the outgoing one. Once a new tenant has been found, the landlord will then charge the outgoing tenant the Agreed Reletting Charge.
The fee amount can vary depending on the agreement made by the landlord and the tenant. Typically, a percentage of the monthly rent is charged as the ARC. However, there is no legal limit on the amount that can be charged. Therefore, it is essential to check the terms of the tenancy agreement before signing to know the charges you could incur.
Is the Agreed Reletting Charge Legal?
The legality of the Agreed Reletting Charge is often a contentious matter. In some regions or states, there are no specific laws governing the use of ARC. However, in other regions, it is illegal to charge such fees.
In the UK, the Agreed Reletting Charge is legal, and it is commonly used in many residential tenancies. However, the charge can only be enforced under specific conditions outlined in law. It is also worth noting that an ARC cannot be charged if the tenant has to leave due to domestic violence.
In the USA, the rules governing ARC vary from state to state. Some states have specific laws that prohibit landlords from charging this fee to tenants, while others have no specific laws regarding ARC. Thus, it is essential to understand the local regulations in your state concerning ARC’s legality.
Benefits of the Agreed Reletting Charge
The Agreed Reletting Charge can be beneficial for both landlords and tenants in several ways. Here are some of the benefits:
For the landlord:
– The ARC ensures that the landlord does not incur any significant income losses due to an early tenant’s departure, as they can recover costs associated with re-letting.
– It helps to encourage tenants to stay for the entire duration of their lease, reducing the landlord’s efforts in finding new tenants.
For the tenant:
– The ARC allows tenants to terminate their lease early, should they need to move out, without fully incurring the cost of the remaining term’s lost rent.
– It helps tenants avoid the costs of subletting the remaining term of their lease in situations where they cannot complete the term.
Conclusion
The Agreed Reletting Charge is a fee that can be charged to a tenant who terminates their lease early and is typically outlined in the tenancy agreement. Its legality often depends on local rules and regulations. Landlords can only charge ARC under specific conditions. The Agreed Reletting Charge can be beneficial to both landlords and tenants by protecting the landlord’s income and reducing the amount of lost rent for the tenant.
If you are a tenant, it is essential to understand the terms and conditions of your lease, so you know if you’ll be liable for paying the Agreed Reletting Charge. Conversely, as a landlord, make sure you understand the specific conditions under which ARC can be charged while drafting the tenancy agreement.