A periodic tenancy is a type of lease agreement where the tenant rents a property for an indefinite period. It is a common form of renting property that provides flexibility for landlords and tenants.
This guide aims to provide a comprehensive overview of periodic tenancy and help you understand more about the property business.
What is a Periodic Tenancy?
Rolling periodic tenancy, often called periodic tenancy, is an arrangement where the tenancy continues on a rolling basis without a fixed end date. Unlike fixed-term tenancy, the periodic tenancy is automatically renewed.
For example,
If the tenant signs a lease agreement with the landlord on 1 January on quarterly periodic tenancy agreeing to pay at the start of the month, the tenant pays at the start of each quarter.
The lease is automatically renewed at the start of the next quarter (1 April) unless the tenant or landlord provides a required notice to terminate.
Types of Periodic Tenancy
When choosing between fixed-term and periodic tenancies, landlords and tenants should carefully consider their preferences, needs, and local rental laws. Each type has its advantages and drawbacks. There are two types of periodic tenancy that you need to be aware of.
Contractual Periodic Tenancy
It is explicitly agreed upon in the tenancy contract rather than being an automatic transition from a fixed term to a periodic tenancy.
This agreement may be made either at the beginning of the tenancy or shortly before the expiration of the fixed-term contract. It is possible to establish a periodic tenancy by specifying the initial term as one month or a week.
Statutory Periodic Tenancy
It occurs when an assured shorthold tenancy concludes its fixed term. If the tenant chooses to stay at the property without renewing the contract, the tenancy automatically continues on a rolling, periodic basis.
Suppose the tenant continues to pay rent after the fixed term has ended, and the landlord accepts it. In that case, the transition from a fixed-term assured shorthold tenancy to a statutory periodic tenancy happens automatically.
The tenancy period will depend on the frequency of the payment of rent such as weekly/monthly/quarterly.
Periodic vs Fixed-Term Tenancy
There are some differences between periodic and fixed-term tenancy that you need to be aware of:
- Length of contract: Fixed-term tenancy is for an agreed specific length (for example, six months) after which the contract expires; meanwhile, periodic tenancy has no specified end date.
- Renewal of contract: After the fixed-term contract expires, it needs to be renewed and agreed upon by both parties, but the periodic tenancy is automatically renewed.
- Notice requirements: Generally, no notice is required at the end of the term of fixed-term tenancy, but you need to provide notice for periodic tenancy according to statutory requirements.
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Increasing Rent on a Periodic Tenancy
Section 13 of the Housing Act 1998 outlines the process for landlords to increase rent on a statutory periodic tenancy.
It also applies to contractual tenancy agreements where there is no mention of the rental increase in terms of the contract. You can act according to the agreement if there is a term to increase rent under the contractual periodic tenancy.
Here is the summarised version of Section 13:
Notice of Increase
The minimum period for the notice to take effect is determined based on the type of tenancy:
- For yearly tenancies: Six months’ notice.
- For tenancies with periods less than a month: One month’s notice.
- For other cases: A period equal to the tenancy period.
Frequency and Timing of Rent Increase
A landlord can use a Section 13 notice to increase rent once a year.
Referral to Tribunal
- Tenant can refer the notice to the First-tier Tribunal (Property Chamber) if they disagree with the increase.
- Referral must be made before the notice period expires using Form 6.
- The Tribunal determines a market rent for the property.
Ending Periodic Tenancy as a Landlord
Ending a periodic tenancy as a landlord typically involves providing proper notice to the tenant. The process may vary depending on local laws and the terms specified in the tenancy agreement.
A landlord commonly uses a Section 21 eviction notice to terminate a periodic tenancy. Referred to as a ‘no-fault eviction,’ this process allows the landlord to end the tenancy without requiring a specific legal reason for eviction.
The landlord cannot end an Assured Shorthold Tenancies (AST) under the Housing Act 1998 Section 21 Notice procedure in the first six months of the tenancy, whether fixed term or periodic AST.
Section 21(4)(a) of the Housing Act 1998 addresses the notice for periodic tenancy.
In the case of statutory periodic tenancies, the standard Section 21 notice period is typically two months, but landlords can extend it if desired.
For contractual periodic tenancies, notice periods are usually the same as in statutory periodic tenancies. However, if rent is paid quarterly or yearly, the notice period must be 3 or 6 months, respectively.
You can consider these things during periodic tenancy eviction:
Notice to Terminate:
- The landlord must provide the tenant with appropriate notice as required by 21 of the Housing Act. The notice period can vary according to the type of tenancy.
Grounds for Eviction:
- Nonpayment of rent, illegal activities on the property, or breach of the contract term can be grounds for eviction. The specific ground may also vary based on local landlord-tenant laws. You need to be aware of these laws in your area.
Legal Requirements:
- Landlords must adhere to legal requirements and procedures for eviction as outlined in local rental laws.
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What Makes a Section 21 Notice Invalid?
A Section 21 notice in the UK may be deemed invalid for various reasons, necessitating landlords to adhere to specific legal requirements for its validity. Common grounds for invalidity include issues with the form, such as using an incorrect form or providing inaccurate details about the tenant or property.
Timing is crucial, and if the notice is issued before the end of a fixed-term tenancy or fails to provide the required two months for statutory periodic tenancies, it may be considered invalid.
Compliance with deposit protection regulations is paramount, as failure to protect the deposit in an approved scheme or provide prescribed information can render the notice void. Licensing requirements must be met, and if the property should be licensed but isn’t, the Section 21 notice might be invalidated.
Outstanding repairs, retaliatory eviction in response to legitimate tenant complaints, breach of selective licensing schemes, absence of a valid Gas Safety Certificate or Energy Performance Certificate, and failure to serve prescribed information can also contribute to the invalidity of a Section 21 notice.
Landlords should seek legal advice to ensure compliance with regulations, and tenants receiving what they believe to be an invalid notice may explore legal avenues for challenge.
Ending Periodic Tenancy as a Tenant
If you have a periodic tenancy, you can terminate it by providing notice to your landlord anytime. You will be responsible for paying rent until the end of the notice period. Termination can also occur through mutual agreement or eviction if valid grounds exist.
Notice for a periodic tenancy is typically given in writing and is usually 28 days. The notice period should be four weeks if rent is due weekly. Tenants need to make sure that they have paid all their bills due.
Conclusion
In summary, periodic tenancy provides flexibility with automatic renewals, while differences from fixed-term leases include no specified end date and automatic renewal. Rent increases follow Section 13 guidelines.
Landlords use Section 21 notices for eviction, with specific rules and notice periods. Tenants can terminate with notice, considering specified periods and responsibilities.
