What is a Statutory Periodic Tenancy?
An assured shorthold tenancy automatically becomes a “periodic tenancy” if new contracts aren’t signed after the fixed-terms expire in the original Tenancy Agreement and the same tenant(s) remain in the property. When this happens, the tenancy will continue due to statute, and technically a new tenancy begins, but all the same terms and conditions apply, but the only difference is that the contract becomes periodic, otherwise known as a ‘rolling’ contract, which typically runs on a month-by-month period.
The “period” is dependent on how frequently the rent is paid. For example, if the rent is paid on a PCM (Per Calendar Month) basis, which is most often the case, then the contract will run on a month-by-month basis (unlike fixed term contracts, which most commonly run for 12 months). Same principle applies if the rent is paid on a weekly or bi-weekly basis. If the tenant paid six months’ worth of rent up front, then the period of the tenancy will reflect this last payment (so it will be a six month periodic tenancy).
Many people assume that as soon as a tenancy expires (e.g. the fixed date has come to an end/passes) that the tenancy automatically terminates. That is not the case.
Most tenancies today are assured shorthold tenancies, so in most situations where tenants stay on after the end of the fixed term, they will have a statutory periodic tenancy.
What is a Contractual Periodic Tenancy?
A “Contractual periodic tenancy” is slightly different to a “Statutory periodic tenancy”
A contractual periodic tenancy exists when both landlord and tenant agree in contract that the tenancy will become a periodic tenancy after the fixed term, as opposed to allowing it to naturally roll into a periodic tenancy. And unlike a “Statutory periodic tenancy”, a “Contractual periodic tenancy” does not start a new tenancy, but continues from the previous fixed tenancy.
It can be a contractual periodic tenancy in three ways:
- 1) By making it clear in the original tenancy agreement that the tenancy will become a “contractual periodic tenancy” after the fixed period (the word “contractual” should be stated).
- 2) By getting the tenant to sign a periodic tenancy agreement when the fixed term contract is shortly due to expire.
- 3) It is possible to start a tenancy with a periodic tenancy rather than a fixed term of 6 months or 12 months. You can do this by giving the tenant an initial term of just one month (or a week) and then just allowing it to run on. However, bear in mind you cannot serve notice to the tenant for at least 6 months, because they are still protected by their statutory rights which stipulates a shorthold tenancy cannot be shorter than 6 months. This can only be overturned if there is a mutual agreement by the landlord and tenant for the tenancy to end.
When this is done, the tenancy does not end, but continues (assuming the tenants don’t move out) on a periodic basis, as set out in the agreement. Normally this will be for a monthly periodic tenancy.
One of the advantages of contractual periodic tenancies is that you can specify what the period of your periodic tenancy will be so this creates certainty.
When/how does a Statutory Periodic Tenancy begin?
To reconfirm, you don’t have to do anything to initiate a periodic tenancy.
Tenancies automatically become periodic immediately after the fixed date in the contract has expired and when new contracts aren’t signed. Neither landlord or tenant need to do anything.
What do I need to do when my tenancy becomes periodic?
Do I need to re-register my deposit if the tenancy becomes periodic?
This is a frequently asked question, so I’m going to quickly address it.
This article by TDS (tenancydepositscheme.com) says the following on the matter:
If the deposit is held in either TDS’ Insured or Custodial scheme, the deposit is protected until the tenancy ends. As the tenancy turning periodic does not indicate the end of the tenancy, then the deposit would not need to be re-protected provided the tenant(s), landlord(s), premise, and deposit scheme all remain the same. However, there may be different rules for other tenancy deposit protection providers.
Essentially, check with the provider you’re using to secure the deposit on whether you need to re-protect the deposit if the tenancy becomes periodic.
“How to Rent” Guide
Landlords in England should are required to serve tenants with a Government issued “How to Rent” Guide to tenants at the beginning of the tenancy. These guides are updated over time.
Contractual periodic tenancy: landlords do not need to check if there has been an update or serve any extra copies on the tenant..
Statutory periodic tenancy: if a new guide is issued from the one you already provided your tenant [at the beginning of the fixed term tenancy], you should provide your tenant with the latest version at the start of the periodic tenancy.
When/how does a Periodic Tenancy end?
Like any other type of tenancy, periodic tenancies should only be terminated through proper legal processes. A periodic tenancy will continue until it is terminated either by one of the following methods:
- Mutual consent (i.e. when both landlord and tenant agree to terminate the tenancy)
- Eviction by landlord (if there are grounds to to do)
- Notice by tenant (the notice period will depend on how often rent is paid, as discussed above)
- Notice by landlord (a minimum of 2 months written notice must be given to tenant
Please go to the linked blog post to find out more on how to end/terminate a periodic tenancy.
What are the advantages of a Periodic Tenancy?
- They allow flexibility e.g. if the landlord suddenly wants the property vacated, he/she can immediately serve a Section 21 Form – notice of possession, without having to wait for a fixed term to expire before the tenant has to vacate.
- There’s no need to arrange another tenancy agreement, the clauses in the expired agreement will still apply. Additionally, saving paper is awesome!
- Many snake-oil letting agents charge a tenancy renewal fee for renewing contracts. So, if a landlord allows the contract to transform into a periodic tenancy, a new contract is not required, consequently often escaping the admin costs associated with the process.
- If the landlord wants to be greedy and increase rent, or add any additional clauses to the contract, he can do so pretty sharpish, providing that the periodic tenancy is terminated and a new agreement is put in place. Since the period of a periodic tenancy depends upon the rent payment schedule, it doesn’t take long for any of the new clauses to be added since most rent is paid on a monthly basis.
- Finally, the biggest advantage in my opinion, which makes periodic tenancies incredibly useful; it’s a lot quicker and easier to remove rogue tenants during a periodic tenancy i.e. Landlords can serve a Section 21 to regain possession, and providing that it’s been served correctly, the eviction process is usually a lot more efficient than serving a Section 8 Eviction notice.
What are the disadvantages of a Periodic Tenancy?
- As I already experienced in a harsh life lesson, putting good tenants on periodic tenancies is risky because they can unexpectedly vacate pretty quickly.
- Tenants typically only need to give one month’s notice when they’re on a periodic tenancy, which may not allow a comfortable amount of time for the landlord to find new tenants if the current tenant gives minimal notice. The issue can become extra stressful if the property requires cosmetic work in order to attract new tenants.
- Over the years, new regulations have been passed through into the BTL industry (e.g. Tenancy Deposit Scheme). These new regulations should be mentioned in the tenancy agreement as statutory clauses. Point being, if you allow a contract to continually be periodic for a long period of time, it can slowly become out of date. It’s important to keep tenancy agreements inline with the law, so the T&C’s are always clear in black and white.
- Finding new tenants can be expensive, so if you’re a landlord that prefers using 6 months fixed term agreements, and always allows the tenancy to go periodic, you’re leaving a big window of opportunity for a high tenant turnover rate. It can often be more cost-effective to fix tenants for long term. Of course, that’s largely dependent on your own judgement to decide on whether you have good tenants or not that are worth the commitment.
I know many landlords, including myself, favour periodic tenancies because of the flexibility. I generally like things to dangle and have wiggle room :) But it’s important for landlords to remember that the flexibility also applies to tenants. Once the tenancy becomes periodic, tenants have the ability to vacate quickly, and leave the landlord with a lot of work to do in a short space of time, especially if the property needs to be repaired in order to become presentable. Finding good tenants isn’t always the easiest, cheapest or quickest of processes.
So, my question to my fellow landlords, do you allow tenancies to go periodic? Do you have any kind of game plan when it comes to contracts?
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.