What Is a Periodic Tenancy? Risks and Rewards

Periodic tenancies can offer great benefits, including increased flexibility and less paperwork. However, they aren’t without their drawbacks.

That’s why we’ve created this guide on the risks and rewards of periodic tenancies, to help you make an informed decision before drawing up a contract.

What is a Periodic Tenancy Agreement?

A periodic tenancy is a tenancy that runs for a certain period of time, most commonly month to month. Periodic tenancies can also run on a week to week or quarterly basis, although this is less common.

Unlike fixed term tenancies, periodic tenancies work as a rolling contract which can be terminated by landlord or tenant by giving notice.

Types of Tenancy Agreements

Tenancies can come in all shapes and sizes, depending on the terms and conditions of the agreement. However, here are the most common types of tenancies you’re likely to come across;

Assured Shorthold Tenancy

Assured shorthold tenancies are the most common and apply to most private rentals with a tenancy date starting after 15 January 1989. Most assured shorthold tenancies begin with a fixed period of 6 or 12 months.

Non-Assured Shorthold Tenancy

If your rental property demands less than £250 or more than £100,000 in rent per year or it is used as a holiday home, it won’t be eligible for an assured tenancy. This means you don’t have to enter the tenant’s deposit into a protection scheme or serve a section 21 notice to evict tenants.

Assured Tenancy

It is unlikely you’ll need an assured tenancy these days unless you are a housing association. This type of tenancy gives the tenant longer-term stability.

Excluded Tenancy

Sometimes referred to as a license, excluded tenancies are for tenants who lodge with their landlord and share communal areas.

Regulated Tenancy

If a tenancy started before 15 January 1989 it may be a regulated tenancy. The difference being that tenants have enhanced rights when it comes to eviction and ‘fair rent’.

Company Let

When renting to companies, different rules apply in terms of deposit protection and eviction notices.

Fixed Term Tenancy

A fixed term tenancy lasts for an agreed set of time, depending on what is set out in the tenancy agreement. Usually this will be 12 months.

Short-Term Fixed Tenancy

A short-term fixed tenancy lasts for 90 days or less.

Periodic Tenancy

A periodic tenancy works on a rolling basis with no fixed end date. E.g. month by month.

What is a Statutory Periodic Tenancy?

A statutory periodic tenancy occurs when an assured shorthold tenancy comes to the end of its fixed term and the tenant stays at the property without renewing the contract. If the tenant continues to pay rent and it is accepted by the landlord, the tenancy will continue on a periodic, rolling basis.

This transition from fixed term assured shorthold tenancy to statutory periodic tenancy is automatic.

What is a Contractual Periodic Tenancy?

A contractual periodic tenancy differs in that it is agreed in the tenancy contract as opposed to automatically transitioning from a fixed term into a periodic tenancy. This can either be agreed upon at the start of the tenancy or shortly before the fixed term contract expires.

It is also possible to enter into a periodic tenancy from the outset by setting the initial term as one month or week.

How Does a Periodic Tenancy Work?

While a fixed term tenancy lasts for an agreed set of time, a periodic tenancy works on a rolling basis, from month to month or week to week. It doesn’t end until one party gives notice.

In a periodic tenancy, the period depends on when the rent is paid by the tenant. So, in a monthly period tenancy the tenant would pay rent each month.

Shorthold tenancies become periodic tenancies after the fixed term agreement expires and if there is no new contract drawn up with the remaining tenants. The assured shorthold tenancy will automatically become a periodic tenancy as long as the tenants do not change, and they are happy to retain the same contract. The same conditions will apply and there is no further action needed by the landlord or tenant.

Ending a Periodic Tenancy

To end a periodic tenancy, there are several legal processes that can take place;

Periodic Tenancy Notice: Tenants

To end a periodic tenancy, tenants will need to give the right amount of notice depending on the terms stated in the tenancy agreement. They also need to ensure it ends on the right day. For example, if a monthly periodic tenancy began on 1st January it will need to end on the last or the 1st day of the month. From this date, they will no longer be liable for rent payments.

Statutory Periodic Tenancy Notice

If it is a statutory periodic tenancy, tenants must give at least 1 months’ notice for a monthly contract or at least 4 weeks’ notice for a weekly contract. The notice must end on the first or last day of the tenancy period.

Periodic Tenancy Notice Period: Landlords

Landlords must give tenants a written ‘notice to quit’ which must end on the last day of the rental period, give the minimum notice period and include legal information.

For statutory periodic tenancies, it is also possible for landlords to issue a section 21 notice as long as the landlord gives the tenant at least two months’ notice and the last day is the last day of the tenancy period. If the tenant does not move out on this date, landlords have the right to request a court order to regain possession. However, changes to the law regarding section 21 notices now require a landlord to give their reasoning, alongside relevant evidence.

Benefits of a Periodic Tenancy for Landlords

A periodic tenancy can have wide-ranging benefits for both landlord and tenant, including;

Risks of Periodic Tenancies for Landlords

With these advantages also come risks. If you’re thinking of entering into a periodic tenancy, watch out for the following potential dangers;

Periodic Tenancies: Good Idea?

Periodic tenancies can be a good idea as they offer increased flexibility for both landlord and tenant and can reduce the number of administrative tasks needed throughout a tenancy.

However, to protect your investment, we recommend;