I would be tempted to send the termination notice, as residential tenancy laws demand, but send a separate email saying that you have done this because he wants to change the conditions of the tenancy and that requires the ending of the current lease, otherwise it would just roll on under the current conditions (which he doesn’t want).
That’s more than you have to say but it puts the onus back on the tenant, who seems like an opportunist of the first order. Half rent and no arrears? Why don’t you just give him the deeds to the property.
I would call his bluff and say that you need to come round and take pictures so you can put the property on the market as soon as possible. See how he likes them apples.
But seriously, he is the one who has demanded changes to the lease, and legally you are required to give him notice that the lease is ending. A separate email as I outlined above would not (in my very non-legal opinion) negate the termination notice.