Renewals – Fixed Term or Periodic?
If your tenant’s tenancy is due to be renewed, you may be deliberating whether to go for a fixed term contract or a periodic tenancy, whichever you choose there are other factors to consider.
What is the difference between the two?
A fixed term contract is exactly that, fixed. The minimum term agreeable on an assured Shorthold Tenancy is six months but can span for several years if both parties are happy. However, a periodic tenancy runs from month to month with no need to sign updated contracts at the end of each period.
Why choose a fixed term contract?
In short, a fixed term contract offers more security for tenants and landlords looking for a longer term let. In a fixed term contract, neither party can terminate the contract early unless both parties agree and if either party decide that they would not like to renew at the end of a fixed term, then the correct notice periods must be adhered to. Whilst in a fixed term contract, a tenant can give one months’ notice from their rent day to vacate at the end of the fixed term period. A landlord would need to give two months’ notice for a tenant to vacate at the end of the fixed term period.
Is a periodic tenancy more flexible?
A periodic tenancy does offer more flexibility and is ideal for shorter terms as it effectively runs month to month rather that six monthly or annually. The standard notice periods would still apply during a periodic tenancy whereby a tenant would need to give one months’ notice from their rent day and a landlord would give two months’ notice, however these notices can be given at any point.
So which type of contract is best for me?
The type of contract you choose at renewal should be considered on a case by case basis.
If you are happy with your tenants and would like them to stay for a long time, then a fixed term contract is recommended for security and longevity.
If you or your tenant are unsure of your future plans, if your tenants are looking to move in the near future or you are considering other options for the property then either a six-month fixed term contract or a periodic contract may be more suitable for you to provide the flexibility that you or your tenant may need.
Still unsure?
If we manage your tenancy for you or if you have used out ‘Let Only’ service to find your tenants, then we will inform you when your fixed term is due for renewal and discuss the options available to you. We can then also negotiate rental increases and the new tenancy terms with your tenant on your behalf.