Going Periodic: What Happens When a Tenancy’s Fixed Term Ends?

Summary: When a fixed-term tenancy ends, it often converts automatically into a periodic tenancy, providing flexibility for both landlords and tenants. Understanding how periodic tenancies operate, including notice requirements and rent adjustments, is essential for landlords to manage their properties effectively and comply with legal obligations.

What Is a Periodic Tenancy?

A periodic tenancy is a rental agreement that continues automatically after each rental period, such as weekly or monthly, depending on how frequently rent is paid. Unlike a fixed-term tenancy with a defined start and end date, a periodic tenancy rolls on indefinitely until either the landlord or tenant serves the appropriate notice to end it. This arrangement is sometimes called a “rolling contract” because it renews continuously.

The Renters’ Rights Act and Its Impact on Periodic Tenancies

The Renters’ Rights Act, which applies in England, will abolish fixed-term Assured Shorthold Tenancies (ASTs) from its Commencement Date. From that point, all tenancies will automatically become periodic, with rent periods capped at one calendar month. These will be known as “Section 4A assured tenancies.”

There will be no transition period, meaning all existing fixed-term tenancies will convert to Section 4A periodic tenancies on the Commencement Date. Landlords will no longer be permitted to offer fixed-term lets, and failure to comply could result in civil penalties of up to £7,000.

Under the new system, tenants can end their tenancy at any time by giving at least two months’ notice, which must expire at the end of a rent period. Landlords will no longer be able to use Section 21 or traditional Section 8 notices to regain possession. Instead, possession must be sought under revised Section 8 grounds with notice periods ranging from two weeks to four months, depending on the eviction reason.

The Act also introduces stricter rules on rent paid in advance. For further details, landlords can refer to the guide on rent in advance.

How Do Periodic Tenancies Start?

1. Automatic Conversion After a Fixed-Term Ends

If a fixed-term tenancy (for example, six or twelve months) expires and neither landlord nor tenant takes action to renew or end the contract, the tenancy automatically converts into a periodic tenancy. This is known as a statutory periodic tenancy. The original terms remain in effect, but there is no fixed end date.

2. Agreed From the Outset

Alternatively, landlords and tenants may agree at the start to create a periodic tenancy. This is less common but offers flexibility for both parties. The tenancy period is usually aligned with the rent payment cycle and continues until notice is given.

Duration of a Periodic Tenancy

A periodic tenancy has no fixed end date and continues indefinitely until terminated by either party with proper notice. The tenancy renews at the end of each rental period, typically monthly or weekly, depending on rent payment frequency.

• If rent is paid monthly, the tenancy rolls over monthly.
• If rent is paid weekly, the tenancy rolls over weekly.

This flexibility benefits landlords and tenants by allowing adjustments without the constraints of a fixed-term contract. However, landlords must be familiar with the correct notice periods and legal requirements for ending the tenancy.

Increasing the Rent on a Periodic Tenancy

Under Section 13 of the Housing Act 1988, landlords can increase rent on a statutory periodic tenancy by serving a Section 13 notice. If the tenancy agreement contains specific rent increase provisions, those should be followed.

The notice period for a rent increase depends on the rental period:

• For tenancies with rental periods of one month or less, at least one month’s notice is required.
• For yearly tenancies, six months’ notice must be given.

In other cases, the notice period should match the tenancy period. Landlords can find guidance on serving a Section 13 notice here.

Serving Notice to End a Periodic Tenancy

Properly serving notice is crucial to legally terminate a periodic tenancy. The notice must be in writing, clearly state the intention to end the tenancy, and specify the termination date in accordance with the Housing Act 1988.

From the Landlord’s Perspective

Landlords can end a periodic tenancy by serving either a Section 21 or Section 8 notice:

1. Section 21 Notice: This notice allows landlords to regain possession without providing a specific reason. At least two months’ notice must be given, ending on the last day of a rental period. Before serving, landlords must ensure all legal obligations are met, including providing an up-to-date gas safety certificate. A free Section 21 notice tool is available here.
2. Section 8 Notice: Used when tenants have breached tenancy terms, such as rent arrears. Notice periods vary from two weeks to two months depending on the grounds. The notice must specify the grounds for possession, which may be mandatory or discretionary.

From the Tenant’s Perspective

Tenants wishing to end a periodic tenancy typically must give at least one month’s notice for monthly tenancies or four weeks’ notice for weekly tenancies. The notice should end at the conclusion of a rent period and be in writing, clearly stating the intention to leave and the move-out date.

When Only One Tenant Wants to Leave a Joint Periodic Tenancy

In joint periodic tenancies, any one tenant can serve notice to quit. This requires at least one month’s notice, ending at the next rental period, unless the agreement states otherwise. However, this terminates the tenancy for all joint tenants.

If remaining tenants wish to stay, the original tenancy ends, so it is advisable for the landlord and remaining tenants to negotiate and sign a new tenancy agreement during the notice period to ensure continuity.

Conclusion

Understanding the transition from fixed-term to periodic tenancies is vital for landlords to manage their properties effectively and comply with evolving legislation such as the Renters’ Rights Act. Familiarity with notice requirements, rent increase procedures, and joint tenancy arrangements will help landlords maintain positive relationships with tenants and avoid legal pitfalls.

For further information on tenancy management and legal compliance, landlords can visit Landlord Association UK.