Residential Periodic Tenancies
A periodic tenancy is a tenancy referring to a specific period of time, whether that is weekly, monthly, quarterly or yearly. It may also be referred to as a ‘rolling contract’ because it rolls from one week/month/year to the next.
They most commonly occur after a fixed-term tenancy expires. If the landlord doesn’t renew the tenancy agreement or issue a notice to leave (a section 21 notice), the tenant continues to occupy the property whilst paying the previous rent and the landlord continues to accept this rent; then a periodic tenancy will arise.
Periodic tenancies can also occur if one could infer a landlord and tenant relationship, i.e. rent is demanded by one party and paid by the other, with reference to a regular time period.
How does a periodic tenancy work?
A periodic tenancy, in theory, can continue indefinitely. If it arose as a continuation of a fixed-term tenancy then it would remain subject to the same clauses and conditions of the original agreement signed by both of the parties. The term of the periodic tenancy will be in accordance with the rent schedule – if a tenant paid rent monthly in the previous agreement it will become a monthly periodic tenancy, if weekly then it will be weekly.
The start date of the new term is determined by the date the previous tenancy ended as opposed to the rent payment date. Landlords should note that they cannot change the term of the tenancy simply by changing the date the rent is due. For example, if the previous contractual term ended on the 14th of the month and rent was paid monthly then the new term would be from the 15th to the 14th every month, even if both parties then agreed that from now on rent would be paid on the 1st of the month.
How can you end a periodic tenancy?
In order for a landlord to end a periodic tenancy, they must serve a minimum of 2 months’ notice or a complete period of the tenancy, whichever is the greater, ending on the last day of the period. This means that if the tenancy is quarterly the landlord must give three months’ notice, but if the tenancy is weekly they must give a minimum of two months’ notice. Even once this notice is served, the tenant is still able to apply to the court to enforce a new Lease if they so wish.
For a tenant, they can serve a Notice-to-Quit on the landlord. Again, the minimum period is a complete period of the tenancy, but the absolute minimum period is lowered to a month’s notice rather than two. I.e. if the contractual term is weekly they need only give a month’s notice as opposed to two.
What are the advantages of a periodic tenancy?
A periodic tenancy is considerably more flexible than a fixed-term tenancy, particularly if the tenancy runs monthly. For either party to terminate the relationship there is a much shorter notice period and no need to wait until the expiration of the term.
It also saves the need to renegotiate the tenancy agreement. This is particularly helpful if both parties are content with the current arrangement; it saves money, time and effort on both sides to allow the tenancy to become a periodic tenancy as opposed to renewing the tenancy agreement.
What are the disadvantages of a periodic tenancy?
Whilst flexibility can be a positive, it can also be a large negative. As stated previously, either party may end the relationship on a short notice period. This can leave a tenant searching for somewhere to live, or a landlord with no tenant and therefore no rental income. This becomes an even larger problem for a landlord if works are required in order to attract a new tenant and make the property look presentable.
Another issue with a fixed term tenancy continuing into a periodic tenancy for an extended period of time is that the terms of the tenancies may become out of date with current practices and legislation should a problem arise.
If you are a Landlord or Tenant seeking advice on periodic tenancies, please don’t hesitate to get in touch with our Real Estate department who will be happy to help. Either visit https://www.herrington-carmichael.com/contact/ or call us on 01276 686222.