When landlords in the UK want to regain possession of their property, they often rely on a Section 21 notice, a legal no-fault eviction process under the Housing Act 1988. However, some landlords may prefer to avoid formal eviction proceedings and instead negotiate a voluntary agreement with tenants. One such method is the "cash for keys" arrangement, where the landlord offers financial incentives in exchange for the tenant vacating the property by a specified date.
But is this approach legal for landlords? How does it compare to a Section 21 notice? This article explores the legality, benefits, drawbacks, and key considerations for both landlords and tenants when opting for cash for keys instead of a formal eviction.
What Is a Section 21 Notice?
A Section 21 notice is a legal tool that allows landlords in England and Wales to evict tenants without providing a reason, provided they follow the correct procedures. Key features include:
It is a no-fault eviction, meaning the landlord does not need to prove tenant wrongdoing.
The notice period is typically two months, but this can vary depending on tenancy terms.
Landlords must ensure the tenancy deposit is protected and provide tenants with required documents (EPC, Gas Safety Certificate, and the government’s "How to Rent" guide).
If tenants refuse to leave, landlords must apply for a court order.
While a Section 21 notice is a straightforward legal route, it can be time-consuming and costly if tenants contest the eviction.
What Is Cash for Keys?
Cash for keys is an informal agreement where a landlord offers a financial incentive (usually equivalent to several months' rent) in exchange for the tenant voluntarily surrendering possession of the property. This arrangement avoids the need for formal eviction proceedings.
How Does It Work?
Landlord proposes a deal – The landlord offers a lump sum (e.g., £2,000–£5,000) if the tenant agrees to leave by a set date.
Tenant considers the offer – The tenant weighs the benefits of immediate cash versus the hassle of a formal eviction.
Agreement is formalized – If accepted, both parties sign a legally binding "deed of surrender" to terminate the tenancy.
Payment and handover – The landlord pays the agreed amount, and the tenant vacates the property.
Is Cash for Keys Legal for Landlords?
Yes, cash for keys is legal for landlords as long as:
The agreement is voluntary (no coercion or harassment).
The terms are clearly documented in writing.
The tenant is given reasonable time to consider the offer.
Unlike a Section 21 notice, this method relies on mutual agreement rather than legal enforcement.
Advantages of Cash for Keys Over a Section 21 Notice
For Landlords
✅ Faster Vacating Process – Avoids court delays (which can take months).
✅ Lower Legal Costs – No need for eviction hearings or bailiff fees.
✅ Better Tenant Relations – Less confrontational than formal eviction.
✅ Flexible Negotiation – Can tailor offers based on tenant circumstances.
For Tenants
???? Immediate Financial Support – Helps with relocation costs.
⏳ More Control Over Move-Out Date – Can negotiate a suitable timeline.
⚖ Avoids Eviction Record – Formal evictions can affect future rental applications.
Disadvantages of Cash for Keys
For Landlords
❌ Upfront Cost – Must pay a lump sum, which may be substantial.
❌ No Guarantee of Compliance – If the tenant takes the money but refuses to leave, legal action may still be needed.
❌ Potential for Disputes – Poorly drafted agreements can lead to conflicts.
For Tenants
⚠ May Accept Less Than Entitled – Tenants unaware of their rights might accept unfair offers.
⚠ No Legal Protection – Unlike a Section 21 notice, there’s no formal process ensuring fairness.
When Should Landlords Consider Cash for Keys?
Landlords may prefer cash for keys over a Section 21 notice in situations such as:
Urgent property sales – Need vacant possession quickly.
Problematic tenants – Want to avoid lengthy eviction battles.
Renovation plans – Require immediate access for major works.
Tenant hardship – Offering assistance in exchange for a smooth transition.
Key Legal Considerations
Written Agreement – A deed of surrender should outline:
The agreed move-out date.
The cash amount and payment terms.
Confirmation that the tenancy ends voluntarily.
No Retaliatory Eviction – Landlords cannot use cash for keys to bypass tenant protections (e.g., after a complaint about property conditions).
Tax Implications – The payment may be considered taxable income for the tenant.
Deposit Deductions – Landlords must still follow deposit protection rules.
Conclusion: Is Cash for Keys Better Than a Section 21 Notice?
Both cash for keys and a Section 21 notice are legal for landlords, but each has pros and cons.
Section 21 notice provides a structured, no-fault eviction process but can be slow.
Cash for keys offers a quicker, more flexible solution but requires financial negotiation.
Landlords should assess their specific needs, while tenants should ensure any agreement is fair and legally sound. Consulting a solicitor or housing advisor is recommended before finalizing any deal.
By understanding these options, both landlords and tenants can navigate property disputes more effectively—whether through formal legal channels or mutually beneficial agreements.