- Is a periodic tenancy agreement for you?
- The types of tenancy agreements available
- When will you use a statutory periodic tenancy?
- A contractual periodic tenancy explained
- How will a periodic tenancy work?
- How a landlord can end the periodic tenancy
- Periodic tenancy benefits for landlords
- Downsides for landlords of periodic tenancies
- Are periodic tenancies a good idea?
- Questions about periodic tenancies answered
If you are a landlord or a property investor and want to know ‘What is a periodic tenancy?’ then this article will explain more.
Put simply, a periodic tenancy can offer a range of benefits, but there are some downsides too.
For those who may not know, there are different types of tenancies available and they may cause some confusion to landlords and also to tenants.
One of the big advantages for a periodic tenancy is that they create less paperwork and offer more flexibility.
Is a periodic tenancy agreement for you?
It’s perhaps best to explain that a periodic tenancy is a type of tenancy that will run for a set amount of time and this is usually month-to-month.
However, there are periodic tenancies that will run from week to week or even from quarter to quarter, though these tend to be less common.
There’s one big difference that landlords need to understand and that is a periodic tenancy effectively works as a rolling contract and can be ended by either the tenant or landlord.
Alternatively, a fixed term periodic tenancy is just that and will be for a pre-agreed length of time, usually six months.
The types of tenancy agreements available
Having mentioned fixed term tenancies, this is probably the point to explain that tenancies are available in various types. They’ll have differing conditions and terms within the agreement.
The types of tenancies for a property that a landlord will encounter, include:
Assured shorthold tenancy
These are the most popular type of tenancy and an assured shorthold tenancy is what is used for most rentals. The most popular form is to have a six months’ agreement, but you could have a fixed term of 12 months too.
Non-assured shorthold tenancy
If you have a property that is being used as a holiday home, for example, or the rent is lower than £250 or over £100,000 per year, then it’s unlikely that it will be assured tenancy. Instead, yours will be a non-assured shorthold tenancy which means you cannot evict tenants using a section 21 notice and you do not have to place the tenant’s deposit with a recognised rent protection scheme.
An assured tenancy is quite rare, though housing associations may use them since they give a tenant long term stability with their tenancy agreement.
An excluded tenancy is for those tenants who are lodging with the landlord and will be sharing communal areas. These excluded tenancies are sometimes referred to as a licence.
The laws over tenancy agreements changed on 15 January 1989 with the Housing Act and if a tenant signed their agreement before this date, then it’s likely that it is a regulated tenancy. The difference between a regulated tenancy and an assured shorthold tenancy is that these tenants have enhanced rights for a fair rent and rules over evicting them.
Lots of landlords will rent their property to a company so they can provide homes for employees, but different rules will apply for a company let. Among them will be rules over the eviction process and also the deposit protection.
Fixed term tenancy
A fixed term tenancy usually runs for 12 months, though any other agreed timescale can be used and this needs to be clearly set out within the agreement.
Short term fixed tenancy
These agreements are for up to 90 days and are called short-term fixed tenancies.
When will you use a statutory periodic tenancy?
Having looked at the different types of rental agreements, you may find that your agreement becomes a statutory periodic tenancy.
This will occur when the assured shorthold tenancy reaches the end of its term and effectively comes to an end. However, a tenant may decide to remain in the property without having to renew their rental agreement – this would mean signing up for another six months – and this will need to be agreed by the landlord.
Essentially, the tenant will continue to pay their rent and the tenancy will move onto a periodic or rolling basis so either the tenancy will become monthly, weekly or quarterly.
It also needs to be appreciated that when a landlord and tenant’s rental agreement moves to a statutory periodic tenancy from a fixed term assured shorthold tenancy that the transition is automatic.
A contractual periodic tenancy explained
We have explained that a statutory periodic tenancy will be an automatic switch from an assured shorthold tenancy, but there may be an agreement within the contract about what happens when an assured shorthold tenancy comes to an end. This will be a contractual periodic tenancy and a landlord can agree what happens with their tenant either shortly before the fixed term contract will come to an end, or when the tenancy begins.
How will a periodic tenancy work?
Landlords need to appreciate that a contractual periodic tenancy will run for an agreed time, whereas a periodic tenancy will be undertaken on a rolling basis, as explained earlier.
A periodic tenancy will not come to an end until either the tenant or the landlord gives notice to quit.
So, the definition of a periodic tenancy will depend on when the tenant pays the rent. This means that should they pay rent every month, they will enter into a monthly periodic tenancy. This also follows that if they pay rent weekly then their periodic tenancy will be on a weekly rolling basis and they’ll only have to give a week’s notice to leave.
It’s important that a landlord monitors their paperwork carefully and know when their agreement is due to expire. That’s because if they do not draw up a new contract for their tenant, and the tenant remains in the property, then a periodic tenancy automatically comes into effect.
Indeed, you need to appreciate that this only occurs when there is no change of tenants and they are want to remain in the property with the same terms they enjoyed with an assured shorthold tenancy.
This means that the tenant and the landlord does not have to take any action because the same tenancy agreement conditions will still apply.
How a landlord can end the periodic tenancy
For a periodic tenancy to come to an end, there are some legal steps that need to take place and these will include:
- The landlord will give their tenant notice to leave
- The tenant may give the landlord notice
- The landlord could decide to evict their tenant
- The tenant and landlord agree mutually to end their tenancy.
While this appears to be a straightforward process, we should take a closer look at how a periodic tenancy notice takes place.
Tenants and their periodic tenancy notice
For a tenant to end a periodic tenancy, they’ll need to give notice to the landlord and these terms will be clearly stated within the agreement. They will need to make sure that their notice ends on the right day.
Depending on the terminology, if, for example, a tenant’s monthly periodic tenancy started on the first day of a month, it will need to end on the last day of the month, or even the first day. After this date, the tenant is not liable for making rent payments.
And depending on the agreement, a tenant will need to give at one month’s notice should they have a periodic tenancy that is on a monthly rolling basis. For a weekly rolling tenancy, they’ll need to give at least four weeks’ notice.
It needs to be stated whether the notice should end on the last day or on the first day of the tenancy.
Landlords and their periodic tenancy notice
The landlord can give their tenant a notice to quit, and this tenancy end letter will need to end on the last day of a given rental period and it must also meet the minimum notice within the periodic tenancy – which will usually be two months. They must also include legal information for their tenant.
It’s also possible for a landlord to issue a section 21 notice under a statutory periodic tenancy, but the landlord will need to give at least two months notice to their tenant. Again, they will need to check when the last day of the tenancy is.
So, should a tenant decide they are not leaving the rental property on the agreed date, a landlord can then seek a court order to regain possession of the property.
Landlords should always check what the latest legal position is with either an experienced solicitor or a professional landlords’ organisation. The issue of section 21 notices has changed in recent years – and look to change in the future.
Periodic tenancy benefits for landlords
Why should a landlord consider a periodic tenancy? The simple answer is that there are some benefits for them and also for their tenant and these include:
- A periodic tenancy offers flexibility, particularly if a landlord needs to regain possession of their property. The tenancy agreement will help speed up the process because they will not have to wait several months until the fixed period ends.
- There’s also a benefit for some tenants. The flexibility of a periodic tenancy may suit their needs, particularly for those who need to relocate quickly or move somewhere new for work. These types of tenancies may appeal to some potential tenants.
- With a periodic tenancy, landlords do not have to spend money on finding and vetting new tenants and will save money.
- Increasing the rent is also made easier with a periodic tenancy because the rent can be revised more quickly should the tenancy agreement be on a month by month status.
Finally, another important issue to consider is when the landlord is having issues with their tenant because they can ask them to leave the property more quickly, rather than waiting for the assured shorthold tenancy agreement to come to an end.
Downsides for landlords of periodic tenancies
While explaining the positives for a periodic tenancy, there are some downsides that landlords need consider. They include:
- Most landlords are looking for stability and are keen for tenants to remain in their property for the long term. A periodic tenancy will probably attract those tenants who are looking for flexibility and shorter leases.
- As mentioned earlier, having tenants for a shorter term means having to market the property and then vet their new tenants more regularly.
- For those landlords with a month by month rolling periodic tenancy means they will have not have much time to prepare their property should a tenant decide to leave unexpectedly. Not only will they need to carry out maintenance and redecoration, but they may also need to carry out a thorough cleaning process before the new tenant moves in.
- Another consideration is that if the tenant leaves the property during their notice period, then the landlord may be liable for paying any council tax that may be due in this time. It’s probably worth having this as a clause within the agreement so that the tenant remains responsible for paying council tax up to and including the date of their notice period.
Are periodic tenancies a good idea?
For those landlords and tenants who are looking for flexibility when renting a property, then periodic tenancies could offer a good solution.
As with an assured shorthold tenancy, it’s a good idea for a landlord to have a good contract drawn up to cover a periodic tenancy agreement. The contract will spell out who is responsible for what to help avoid any disagreements.
Landlords will need to be quick and effective when marketing their property for new tenants, so that they can avoid a long void period, which is when the rental home is empty and no rent is being paid.
Landlords will also need to be organised for a quick turnaround so they can avoid these void periods and will need to either organise professionals or carry out the work themselves, including maintenance and cleaning, carrying out inventory management or preparing reports, ensuring that the fire and carbon dioxide alarms, if fitted, are working correctly, and also carry out the Right to Rent checks if the property is in England.
For those who may not be aware, an inventory report is an important part of running a rental property because it’s a detailed report of the property’s condition when the tenant moved in and will usually include photographs.
The benefits are when a tenant moves out and will claim their deposit, but a landlord can use the inventory report to prove the tenant may have caused damage that needs to be repaired and claim this amount from the tenancy deposit protection scheme with evidence.
Questions about periodic tenancies answered
There may be some questions about periodic tenancies that you may have and these will be dealt with here. For example:
What is the notice period on a periodic tenancy?
A tenant can end their tenancy whenever they wish by giving the landlord notice under a periodic tenancy agreement. There will still need to pay rent until the notice period ends.
The amount of notice a tenant will need to give depends on the type of tenancy agreement that’s in place.
For those periodic tenancies that run from month to month, then they will need to give one month’s notice.
For those periodic tenancies that run from week to week, then they will need to give four weeks’ notice.
For those tenants who receive a section 21 notice from their landlord and if they want to move out before this notice expires, then it will still need to give the landlord their own notice to quit.
It’s also worth noting that both the tenant and landlord will need to give notice in writing will need to send this in good time to ensure the right notice period is served.
This means that when you give notice any written correspondence must include:
- The tenant’s name and address
- The landlord (or agent’s) name and address
- The day that the notice period will end.
It’s also important that a tenant checks their last written rental agreement to see where they must send their notice. Unless this is clearly stated, tenants must not send their notice to quit by email, but should send a letter, preferably recorded, instead.
Should the landlord not inform the tenant what their address is – though this is good practice to do so – and if it isn’t clearly stated on the tenancy agreement, then it must be on the tenant’s deposit protection information. If it’s not there, then check the Gas Safety certificate because this must be sent to the landlord’s home address or check with the Land Registry for the landlord’s address.
This is also the point to highlight that should a landlord have a periodic tenancy in place and is taking rent, quarterly or every six months, then the notice period will also be three months or six months. This may be an issue for many landlords, so it is a good idea to take rent payments monthly, weekly or even fortnightly to avoid a lengthy notice period.
How long is a periodic tenancy?
This is an interesting question, particularly for those landlords who have an assured shorthold tenancy that moves automatically to a periodic tenancy.
When the assured shorthold tenancy comes to an end, the tenant will then have a statutory periodic tenancy or a contractual periodic tenancy. These will have specific differences and each has drawbacks and benefits.
In simple terms, a periodic tenancy can continue indefinitely on this basis and will continue on the same terms as the property’s original agreement.
The only way to end it is for either the tenant or landlord to give notice.
The only difference is for those contract periodic tenancies which may have a date for the agreement to end.
It’s also important to appreciate that while the notice to quit period is clearly stated for a periodic tenancy there is no maximum period specified in law for how long a periodic tenancy will run for.
Is a periodic tenancy a new tenancy?
For those landlords wondering whether a periodic tenancy is a new tenancy, then you’ll need to understand that assured shorthold tenancies were established and regulated by the Housing Act 1988.
Under section 5, this clearly states that the tenant who remains in their property when their assured shorthold tenancy comes to an end, will have a new periodic tenancy created automatically.
This means that all of the contract’s terms and conditions will continue to be applied with the exception that the tenant can end their contract at any point by giving at least one month’s notice.
And the landlord can increase the rent for a periodic tenancy, though they will need to give their tenant ‘fair notice’ beforehand.
Also, a contractual periodic tenancy is not a new tenancy.
How do I end a periodic tenancy?
The process for ending the periodic tenancy for a landlord is straightforward. You simply give two months’ written notice for the tenant to quit.
So long as you follow the terms within the contract and the notice period is usually stipulated by the landlord, then you will be complying with the law. There may also be a need to use a section 21 notice for them to leave the property for the tenancy to be terminated.