While tenants have suffered from sudden eviction notices with very little warning, with the rising cost of living, job losses and volatility in individual circumstances, there have also been challenges from those who find themselves locked into fixed-term tenancies.
As a result, the upcoming Renters’ Rights Bill will see the removal of fixed-term assured tenancies so renters have greater flexibility to move if their circumstances change. This is being replaced with a general two-month notice period.
In this article we look at periodic tenancies, what they are, what's changing, why, and what landlords need to do to make sure they're acting in compliance with rules and regulations.
Read our complete landlord's introductory guide to the Renters’ Rights Bill - here
Periodic tenancies are also known as rolling tenancies, and are a type of rental agreement that continues on an ongoing basis without a fixed end date. Instead, they continue for successive periods (e.g., month-to-month, week-to-week), automatically renewing until the tenant or landlord gives formal notice. They are distinct from fixed-term tenancy agreements, which have a specific start and end date where tenants are obligated to pay rent for the entire duration of the agreement unless there's a break clause.
There are two types of periodic tenancy:
● Statutory periodic tenancies, which automatically follows on when a fixed-term tenancy expires without renewal and the tenant stays in the property with the landlord's consent.
● Contractual periodic tenancies, which are written into the tenancy agreement from the beginning.
Between now and when the changes come into force, it's important for landlords to review their tenancy agreements, tenant screening processes, and budgeting to make sure that they fully understand the processes going forwards.
The move to periodic tenancies should be considered alongside other changes being brought in by the Renter's Rights Bill, including the abolition of Section 21 evictions and limitations on rent increases. Other things to think about include:
● To move to periodic tenancies, landlords need to review their tenancy agreements to make sure they're compliant with upcoming changes.
● In the case of any existing fixed-term tenancies, provisions need to be made to transition to periodic tenancies - a reputable letting agent will be able to help you with this.
● It's important to foster positive relationships with tenants so you can work together to adapt to the new regulations.
● If you are starting new tenancy agreements, make sure you strengthen tenant screening processes to minimise the risk of any issues.
● Periodic tenancies can lead to more frequent tenant turnover, so it's important for landlords to budget for potential periods where the property is empty.
The benefit of periodic tenancies is that they offer landlords and tenants more flexibility. For tenants, it means more freedom to move with shorter notice periods if their situation changes (if they buy a house, for example). It can also make the tenancy process simpler - reducing paperwork and minimising renewal fees for example - without the need to formally renew tenancy agreements at the end of each fixed term.
As things stand, tenancy agreements can become periodic in two main scenarios:
● The first is after a fixed term tenancy agreement ends and it rolls into a periodic tenancy.
● The second is when it starts as a periodic tenancy from the beginning of the letting agreement.
There are a number of things that landlords can do to transition towards periodic tenancies. Chief amongst them is to discuss the implications of periodic tenancies with your letting agent, so they can help you plan accordingly. However, some of the legal and practical steps to transition include:
Allowing the tenancy to automatically become a statutory periodic tenancy under the Housing Act 1988.
Check your tenancy agreement and redraft if necessary, adding the appropriate clauses allowing for a periodic tenancy to automatically follow on when a fixed-term tenancy expires.
Make sure you maintain good communication with your tenants, and let them know what you plan to do, changes you intend to make and why, so they are kept fully in the loop.
In addition to those fundamental steps there are a number of other things that it's helpful for landlords to consider when it comes to changes in the tenancy agreement. While these don't specifically relate to periodic tenancies, they may inform your approach going forward.
● Notice periods: Under changes in the Renter’s Reform Bill, landlords seeking to repossess properties will need to give tenants notice under Section 8, with appropriate timeframes depending on the reason.
● Rent reviews: The Renter’s Reform Bill is also bringing in changes as to when and how often rent can be raised. Going forward, landlords will only be able to increase rent once a year, and to the price it would realistically get if it was newly advertised. This has to be done by issuing a Section 13 notice with at least two months’ warning.
● Inspections and repairs: The rules are tightening around the timeframes for different types of maintenance and repair work, depending on what’s required. You can read our article 'A private landlord's guide to property maintenance and safety standards', for more information.
● Eviction rules: The impending abolition of Section 21 evictions, in favour of Section 8 evictions, is an important part of the Renter's Reform Bill that landlords need to be aware of.
What are Section 21 evictions and why are they being abolished? - here
Naturally, you may well have more questions about transitioning to periodic tenancies, and our lettings team at Chestertons is more than happy to help. However, here are a few FAQs to get you started.
You will be able to increase the rent under a periodic tenancy when the new Renter's Rights Bill comes in, but will be limited to doing so once a year and with fair notice to make sure it's in line with reasonable market rates.
If a tenant stops paying their rent, the initial recommendation is to try to resolve the issue amicably. However, if the situation persists, landlords will still be able to initiate eviction proceedings with a Section 8 notice.
Currently you are able to revert to a fixed-term tenancy, but once the Renters' Rights Bill comes into force you will not be able to initiate or revert to fixed-term tenancy agreements.
Generally you won't need an entirely new tenancy agreement, but it is important for landlords to review what's currently in place with the support of expert advice and make any amendments to the current agreement. Make sure you communicate them clearly, effectively, in writing, and with plenty of notice to your tenant to make sure they understand what's happening and why.
Chestertons is the premier London lettings and estate agency with more than 200 years’ experience and a team of experts offering a range of services from a full-time compliance department to valuations and management, for both long- and short-term lets. If you would like to find out more about working with Chestertons contact your local Chestertons letting agent at any time.
Contact your local Chestertons letting agent - here
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