If you’re wondering ‘what is a periodic tenancy?’ read on for our landlord’s guide to what happens to a tenancy after a fixed term has ended – and the key things you need to know.
As a UK landlord, you will probably sign up your new tenant for a fixed period of six or 12 months – or maybe longer. But what happens when that time period ends? In most cases the tenancy continues indefinitely, as a period tenancy, with rent paid at regular intervals. We look at the different types of periodic tenancy, how they work and the advantages and disadvantages for landlords.
What is a periodic tenancy?
A periodic tenancy is a type of tenancy agreement that continues after the fixed term has expired. The fixed term is the initial period for which the tenancy agreement was signed, typically six or 12 months. Once the fixed term has ended, the tenancy automatically continues on a periodic basis. There are two types of periodic tenancy in England.
Statutory periodic tenancy
Under Section 5 of the Housing Act 1988, a statutory periodic tenancy is a new tenancy created automatically when the fixed term of an assured shorthold tenancy ends, and the tenant continues to occupy the property. In this case, the tenancy rolls over into a periodic tenancy, with the same terms and conditions as the original agreement, but with no fixed end date. The period of the tenancy can be week to week, month to month or even year to year, depending on when the rent is paid.
Contractual periodic tenancy
A contractual periodic tenancy is one created from the start of the tenancy, as running from week to week or month to month. Usually, a contractual periodic tenancy is created because a clause is written into the tenancy agreement from the start. In this case the same tenancy continues after the end of the fixed term – unlike the statutory tenancy where a new one is created.
How does a periodic tenancy work?
A periodic tenancy is similar to a fixed term tenancy agreement in that the tenant has the right to occupy the property and the landlord has the right to receive rent. The main difference is that there is no fixed end date to the tenancy. Instead, it continues until either the landlord or the tenant gives notice to end it.
Currently, the landlord can ask the tenant to leave at any point during a periodic tenancy, by using a Section 21, no fault eviction notice. However, be aware that this type of eviction is currently under review by the government.
Ending a periodic tenancy
A landlord who wants to end a periodic tenancy, must give notice to the tenant. For a statutory periodic tenancy, the notice period is usually two months – but, as we said earlier, this may be subject to change as a result of current government rental reforms. For contractual periodic tenancies, the notice period is specified in the tenancy agreement.
Advantages of periodic tenancies for landlords
- Periodic tenancies can provide more flexibility for landlords as you do not have to commit for a fixed term. So, if you may wish to regain the property to live there yourself, or put it up for sale, you currently have the flexibility to do this.
- If you have a problem tenant, you can also currently ask them to leave using a Section 21 eviction notice. This is easier than evicting them for breaking their tenancy agreement using a Section 8 notice.
- Some tenants like the flexibility of a rolling tenancy without a long-term commitment – so this could be a selling point.
- Landlords can also increase the rent on a periodic tenancy more quickly and easily.
Disadvantages of periodic tenancies for landlords
- Periodic tenancies can be less secure for landlords as the tenant could leave by giving just a month’s, meaning you could be without rental income – and without the time to sign up a new tenant.
- Finding tenants can be difficult and expensive – and not something you want to do too often.
- You may be liable for your tenant’s unpaid council tax once a statutory periodic tenancy kicks in – see below.
Things to consider
Deposit protection scheme – as a landlord, you must protect your tenant’s security deposit in a government-backed scheme. The scheme should continue once a tenancy rolls over from fixed term to periodic – but check this with your scheme’s providers.
How to Rent guide – if there have been changes to the government’s How to Rent guide, you should supply a copy of the latest version to your tenant once a statutory periodic tenancy begins – this is because it is effectively a different tenancy to the one your tenant initially signed.
Council tax liability – In most assured shorthand tenancies, the tenant is responsible for paying council tax. If your tenant leaves the property at short notice during a periodic tenancy, the landlord will be liable for picking up any council tax owed.
If you are looking to rent out a property in east London or Essex, talk to us. We have lots of experience of managing properties in this area and would love to talk to you about the range of services we offer.
