It’s a common question – what is a periodic tenancy exactly? This guide explains all you need to know about how a periodic tenancy works and how it differs from other agreements.
In short, if a rental agreement does not have a fixed end date – it is a periodic tenancy, meaning it can continue indefinitely.
According to recent government statistics there are 11m private renters and 2.3m landlords in England, but a periodic tenancy is not the most common type of agreement in place. Instead, it’s an assured shorthold tenancy (AST) agreement.
Before exploring periodic tenancies in detail, it helps to understand what an AST is. Here are some answers to common questions around the different types of tenancy agreements in the UK:
What is an AST agreement?
An assured shorthold tenancy (AST) is currently the most common type of tenancy agreement in England and Wales, the default option introduced by the Housing Act 1988.
It gives tenants the legal right to live in a property while providing landlords with the ability to regain possession under specific conditions, such as the end of the fixed term or a breach of contract.
ASTs usually have a fixed term, often six or twelve months, but they can transition into periodic tenancies if not renewed.
At the time of writing, the Renters’ Rights Bill is working its way through Parliament and if passed in its current form, it would put an end to ASTs in the UK. Every agreement would be an assured periodic tenancy by default – more on this later.
What is a statutory periodic tenancy?
A statutory periodic tenancy occurs automatically when a fixed-term AST ends, and no new agreement is signed.
The terms of the original tenancy still apply, but the contract runs on a rolling basis according to the frequency of rent payments.
The tenancy continues ‘in statute’ automatically under the rules of Section 5 in the Housing Act 1988 unless the landlord and tenant reach a new agreement.
Since these statutory periodic tenancies arise by default after an AST fixed term, a statutory period tenancy is very common in the UK.
What is a contractual periodic tenancy?
A contractual periodic tenancy is created when a tenancy agreement explicitly states that it will continue on a rolling basis after the fixed term:
- Unlike a statutory periodic tenancy, this type is agreed upon in writing at the start of the tenancy, making it a pre-planned arrangement rather than an automatic one.
- The terms of the original contract, including rent payments and responsibilities, remain in effect.
- This setup provides more certainty for both parties compared to a statutory periodic tenancy, as landlords and tenants have agreed in advance to the rolling nature of the contract.
- Some landlords prefer this approach as it avoids uncertainty over whether a fixed-term tenancy will automatically convert into a periodic one.
The agreement is usually a monthly one, but weekly is possible too. It can be a periodic rolling tenancy depending on when the tenant pays the rent – for example, paying the rent each month means it is a monthly contractual periodic tenancy.
Landlords and tenants can also choose to enter into a periodic tenancy from the outset, i.e. rather than beginning with a six or 12 month AST.
How to end a periodic tenancy
This type of tenancy continues until either the landlord or tenant gives a proper end of tenancy notice. Find out more about break clause tenancy considerations in our full guide.
Tenants can end a periodic tenancy by giving written notice, usually one full rental period in advance. For example, if rent is paid monthly, a month’s notice is required, while a weekly tenancy requires a week’s notice.
There is a statutory periodic tenancy notice period – if tenants wish to leave, they must typically provide notice equal to one rental period. Landlords must follow legal notice periods, which are usually at least two months under Section 21 of the Housing Act 1988.
Landlords must give at least two months’ notice under Section 21 of the Housing Act 1988 if they wish to regain possession of the property. However, if the tenant has lived in the property for over four years, the eviction process may take longer due to additional legal protections.
In summary, there are slightly different notice period rules depending on the type of periodic tenancy:
- For a statutory periodic tenancy, they must provide at least two months’ written notice using a Section 21 notice.
- For contractual periodic tenancies, the same rule applies if rent is paid monthly, but if rent is paid quarterly, the notice period extends to three months.
In cases where a tenant breaches the tenancy agreement, landlords may issue a Section 8 notice, which could allow for a shorter notice period depending on the breach.
Periodic tenancy rent increases
Landlords can increase rent in a periodic tenancy, but they must follow legal procedures to ensure fairness.
If the periodic tenancy agreement includes a ‘rent review’ clause, the landlord can raise the rent according to that, but they must still provide adequate notice to the tenant.
For example, a month’s notice for tenants paying the rent monthly, three months for those paying quarterly and so on.
If there is no clause, landlords must use a Section 13 form 4 notice to propose an increase, giving tenants at least one month’s notice. Landlords may use this approach no more often than once every 52 weeks.
Advantages of a periodic tenancy
Landlords benefit by keeping reliable tenants without having to renegotiate a new fixed-term contract – the ability to end the tenancy, with proper notice, also makes it a practical option for both parties.
Advantages include:
- Increased flexibility: You can regain possession of your property more quickly – via a Section 21 notice – without the alternative scenario of waiting for a relatively long fixed term to end
- Easier rent adjustments: Landlords can apply rent increases with less delay, following the required notice period
- More control: You have more control over ending the tenancy if issues arise with a tenant
Additionally, periodic tenancies reduce the admin for landlords, as they do not need to issue a new contract every time a fixed term expires.
Periodic tenancies provide flexibility for tenants who may need to move without being tied to a long-term contract. This can be beneficial for those with uncertain work or personal circumstances, as they are not locked into a fixed-term lease.
Disadvantages of a periodic tenancy
Potential disadvantages include:
- Higher tenant turnover: Offering a periodic tenancy at the outset, instead of a fixed term, can attract tenants looking for short-term arrangements and that does not suit landlords seeking long-term stability
- New tenant costs: Frequent tenant changes can lead to extra marketing and vetting expenses when finding replacements
- Short notice periods: With as little as one month’s notice, you may have limited time to prepare the property for a new tenant, increasing the risk of vacancy periods.
No matter the type of tenancy agreement, a gap between tenants can add extra expenses for landlords – for example, find out – do you pay council tax on an empty property?
Other types of tenancy agreements
There are also several other types of tenancy agreements available, although these are less common:
- Assured tenancy: Common for housing association tenants but also available to private tenants, this agreement allows the tenant to remain in the property for life unless they choose to leave or are evicted for a valid reason
- Non-assured shorthold tenancy: Sometimes called a fixed-term tenancy, landlords can use this when an AST is not possible due to specific circumstances – such as the tenant having another main home, the total rent being £250 or less per year, or the landlord living in the property without sharing amenities
- Excluded tenancy: Applies when a landlord has a subtenant living in the same property and sharing communal spaces – the tenant has exclusive possession of their rented area, usually a bedroom
- Regulated tenancy: Also known as a protected tenancy or rent act tenancy, this is a long-term agreement between a private landlord and a tenant – it was the standard tenancy type in England and Wales before 15 January 1989 and gives tenants stronger rights
- Company let: Occurs when a limited company rents residential accommodation for its staff or directors to live in as tenants
- Short-term fixed tenancy: Has a set start and end date, usually lasting 90 days or fewer
For more guidance that landlords may find useful, take a look at the Fine Living guides on how to rent out your house or flat and this landlord checklist of general responsibilities.
Final thoughts: Renters’ Rights Bill and periodic tenancies
At the time of writing, the Renters’ Rights Bill is awaiting the committee stage in the House of Lords, where it has gone through two readings already.
It has also passed three readings in the House of Commons, but it remains unclear whether the bill will a) become an Act of Parliament or b) pass in its current form.
That said, if it does pass in its current form, it will impact periodic tenancies in a few key ways, including:
- Replacing all ASTs with periodic tenancies, with tenants on rolling contracts, instead of serving an initial fixed rental term
- Ending the right of landlords to serve a Section 21 notice during a periodic tenancy, asking tenants to leave within two months
Fine Living will update this article once there are any further developments around the Renters’ Rights Bill.
As highly experienced estate agents London landlords and tenants have trusted for years, the Fine Living team is here for you!
If you’re a tenant or landlord with queries about periodic tenancy agreements, any other contracts, or you’d like to find out more about something in our portfolio, please don’t hesitate to contact Fine Living.
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