What is a periodic tenancy?
4th March 2019
Understanding a periodic tenancy is crucial for a landlord who wants to maximise the results of his or her rental property.
A periodic tenancy is automatically instituted if an assured shorthold tenancy (AST) comes to an end without a further agreement being made. The periodic tenancy will have the same terms and conditions as the previous AST, depending on the rent payment terms. So if rent was paid monthly, the tenant must give a month’s written notice, if rent is paid fortnightly, then 14 days is all the notice the tenant needs to give. But the landlord has to give the tenant at least two months' notice. The periodic tenancy is often called a 'rolling tenancy'.
Periodic Tenancy advantages
- They reduce administration - the clauses of the former tenancy agreement still operate, so there’s no uncertainty
- They allow flexibility - a landlord can, for example, serve a tenant with a Section 21 if they want the property vacated rapidly
- They permit new clauses to be added - whether it’s a rent renegotiation or some other contractual agreement that needs to be regulated, the new clause can be agreed and implemented from the next rent period
- Where letting agents insist on charging again for a new rental agreement, periodic tenancies allow the agreement to remain in place, without paying more fees.
Periodic Tenancy disadvantages
- Where a landlord has good tenants, a periodic tenancy means that tenants can leave very rapidly
- A periodic tenancy can leave a landlord with a gap between tenants departing and finding new ones, especially if the property needs work before it can be re-let
- Regulations can supersede contracts - so if you let a periodic tenancy trundle on, year after year, you can find that your contract is actually illegal and/or doesn’t guarantee your rights, let alone those of your tenants
- Good tenants can be difficult to find, so while periodic tenancies can feel like they are keeping a good tenant in place, they may also mean that you miss out on keeping great tenants in place over the long term, if you let their tenancy agreement lapse.
Contractual Periodic Tenancy explained
A contractual periodic tenancy is a different animal. It comes into play when landlord and tenant both agree - in a written contract - that the tenancy will become a periodic tenancy, rather than just letting it become one without specific reference. Why does this matter?