What is a periodic tenancy?

by | Nov 21, 2022

Introduction

Periodic tenancy agreements are known for being seen as less secure than other types of agreements such as those in a fixed term. But this isn’t necessarily all bad for tenants as some prefer these agreements for their own reasons. On top of this, there is still some level of protection involved.

For landlords, periodic tenancies have to be approached with caution because the legislation around evicting tenants in a periodic tenancy is different. Making it important to research the topic in-depth and stay informed by reading our article here.

A home that is rented using a periodic tenancy

How do periodic tenancies work?

Periodic tenancies work by the tenant paying rent at certain “periods” throughout their agreement until an undisclosed date. For example, they may choose to pay every week or every month.

When a fixed term in a tenancy agreement ends and neither the tenant nor the landlord wants to end the agreement, the tenancy automatically becomes periodic.

What is a rolling tenancy?

A rolling tenancy agreement is the same as a periodic tenancy. They both refer to the same thing but they have different names.

How should you end a periodic tenancy as a tenant?

Like any other tenancy, the agreement can come to an end by providing a “notice to quit” which is a legal document that you submit to a landlord in order to move out. This must be given with at least four weeks’ notice if rent is paid every month. 

However, the general rule is you’ll need to give one “rental period” worth of notice. So for those who pay rent every week, you can give as little as one week’s notice. And for those who pay rent every quarter, a notice of one quarter must be given.

You can also prevent your agreement from ever becoming a periodic tenancy by making sure you give a landlord notice that you want to leave at the end of the fixed term in the tenancy agreement. This is because all tenancy agreements are protected for the first 6 months from section 21 which means the landlord has to wait at least four months before they can issue a section 21 at the start of a tenancy.

How should you end a periodic tenancy as a landlord?

Landlords can only end tenancies under the regulations laid out in section 8 and section 21 of the Housing Act 1988. This full legislation is laid out here.

Section 8 is the easier way to evict a tenant because it means they have breached their tenancy agreement which gives a landlord the right to regain possession of their home. In this case, if the grounds for a section 8 notice is mandatory, then the landlord just has to issue the notice and the tenant would have to leave within a month.

Under grounds that aren’t mandatory with section 8, there has to be a court evaluation in which a landlord and tenant present their evidence. 

Section 21 is served to tenants who are in a break clause of their tenancy or the tenancy period comes to an end. Periodic tenancy agreements are not in a fixed term and are most likely in periodic status because the agreement has come to an end. So, section 21 can therefore be given at any time.

The landlord will have to issue the tenant with this form which is a form 6A. After the form is issued digitally, the tenant should be given a period to leave for at least 2 months.

A landlord signing a periodic tenancy

It is important to note that a section 21 notice cannot be issued within the first 6 months of a tenancy agreement even if the tenancy is a periodic tenancy. This is because a periodic tenancy is still a periodic assured shorthold tenancy agreement which protects tenants from eviction in this time frame.

How to agree on a periodic tenancy end date

The agreement of an end date for a tenancy agreement can be an amicable discussion between a landlord and tenant. It can be spoken about verbally but should also be written in an agreement.

By law, the end date for a periodic tenancy cannot be given by the landlord without at least 2 months notice and the end date given by the tenant has to be at least one rental period. So if the tenant pays rent every month it is a minimum of one month.

It is common for a landlord to give more notice than this because they may plan more in advance. Also, if the landlord keeps track of the plans of tenants they can get a rough idea of when they may leave anyway. Either way, when a date is agreed upon, the date must be written in a formal document like a notice to quit or a section 21.

What are the types of periodic tenancy?

You may have heard of the different terms when it comes to a periodic tenancy like a statutory tenancy or a contractual tenancy. These different variations of the agreement are explained below.

What is a statutory periodic tenancy agreement?

When a tenant signs a tenancy agreement that is a fixed term agreement then the agreement automatically turns into a statutory periodic tenancy agreement. Statutory refers to being influenced by law which means this is the default option a landlord and tenant must default to under legislation.

If there has been no valid notice to quit from the tenant or eviction notice from the landlord, then the end of a fixed term tenancy agreement will always result in a statutory periodic tenancy.

For example, if the tenant has a 6 month fixed term in their assured shorthold tenancy agreement and they paid rent every month, after these six months are up the agreement would then be called ”a statutory periodic tenancy” where the tenant would then have to continue paying their rent until an undisclosed date.

Aren’t all periodic tenancies statutory?

No, not all periodic tenancies are statutory because some tenants choose to sign into a periodic tenancy agreement straight away. If the agreement did not start off with a fixed term then it will not be called a statutory agreement.

A tenant may sign into a periodic agreement straight away if they aren’t sure how long they want to be staying in a property so they want to stay for a short term. It is also far easier to leave this type of tenancy agreement as the rules around leaving are far more flexible.

The court making a periodic tenancy agreement a statutory agreement

What is a contractual periodic tenancy agreement?

A contractual periodic tenancy agreement is the opposite of a statutory periodic tenancy because a contractual periodic tenancy is signed as periodic from the very beginning. It isn’t as a result of a fixed term in the tenancy agreement coming to an end.

For example, a landlord would sign a tenancy agreement with a tenant that they have to pay rent every month starting from a set date up until an unknown date. For this agreement to come to an end the tenant would have to issue a notice to quit or the landlord would have to issue a section 21 or section 8.

A landlord or tenant can still insert a clause in this type of agreement for a rent review where the rents can be increased, however, but this isn’t always necessary and nor is it mandatory.

What is an assured periodic tenancy agreement?

An assured agreement refers to any tenancy agreement that is protected by the housing act of 1988. This is because beforehand, there used to be regulated tenancies which didn’t have as many rules around them to protect tenants.

This resulted in the government forming new legislation which resulted in the addition of assured tenancies. These tenancy agreements can either be an assured shorthold tenancy (AST) or an assured tenancy. However, an AST is a far more popular option for landlords.

As a result, you can then have an assured periodic shorthold tenancy or an assured shorthold tenancy. The only difference is the periodic tenancy has the tenant pay rent at a set period every month for an undisclosed amount of time.

What are the benefits and disadvantages for landlords with a periodic tenancy?

The most obvious advantage to having tenants in a periodic tenancy is the flexibility involved to get rid of the tenant. You do not have to wait for the end of a fixed term in an agreement to make necessary changes to the tenancy in your property. But what are the other pros and cons of the agreement you have not thought about?

Pros of periodic tenancies for landlords

First and foremost a periodic tenancy is more flexible for landlords allowing the landlord to evict a tenant for no particular reason at any time within two months under section 21 (Given the tenant isn’t in the first months of a contractual periodic tenancy).

Also, keeping tenants in a periodic tenancy prevents the need to renegotiate the tenancy agreement at the end of a fixed term. For example, if you have a tenant in a three year tenancy with a break clause every 6 months, chances are the tenant would want to negotiate terms in the agreement at some point within those three years.

However, for a periodic tenancy agreement, there is no opportunity to renegotiate the agreement unless you brought the current agreement to an end and then asked the landlord to sign a new one. This is great for landlords with tenants who are happy with the agreement as there is very little management involved.

A landlord deciding whether to make a tenancy agreement periodic or not

Cons of periodic tenancies for landlords

Just as a landlord can evict a tenant a lot easier in a periodic tenancy, a tenant can leave the property with even more ease. It can be as little as a week in which a tenant can legally leave the property they are living in and rental income can be gone that quickly.

Because of this, the process of periodic tenancies suits the landlord who knows they can have a new tenant in the property quickly and they aren’t necessarily relying on the rental income from the room or property that is let out in a periodic tenancy to pay any serious bills like a mortgage.

A periodic tenancy commonly has more void periods and tenants usually live in a property like this for a lot shorter period of time. Having said this, there are still cases where a tenant can live in a house in a periodic tenancy for a long period of time without any issues.

Another downside of renting a property in a periodic agreement is the property may become harder to let out because a lot of tenants would instead look to rent out a property with a fixed term to give them more protection. This will reduce the pool of tenants available to rent out the property to and may mean you have to charge higher tenancy fees to make up for the rent lost while finding a suitable tenant

How to increase rent in a periodic tenancy

Increasing rent is a common practice for landlords but there are slightly different rules around rent increasing for those who are in a periodic tenancy agreement.

The difference is that section 13 has to be served in a periodic tenancy as there is no break clause in the agreement to renegotiate rent. This is known as form 4 on the government website. 

Tips on agreeing on a rent increase

Firstly, you should make things clear to a tenant. If there is no rent increase clause in the tenancy agreement, then there isn’t much you can do as a landlord to increase the rent for the current tenant aside from issuing a section 13. Letting them know this will ensure it is not surprising when section 13 is issued.

However, making this known and being transparent about the fact that it may result in the tenancy having to come to an end in order to bring in a new tenant in who can afford a higher rent is also another way you can make it make sense to the tenant so the section 13 doesn’t come as a surprise

On top of this, you can justify the increase by explaining to the tenant that the average rents for the area are higher and you are raising rents to match demand. Using tools like average rent calculators which you can find here for the area as an example is a great way to show this.

How to serve a section 13 in a periodic tenancy

Section 13 is the only way to increase rents in a periodic tenancy and they can be issued in a periodic tenancy every year at most. This is to prevent landlords abusing their power and charging more than the market rents in the area.

First, a landlord must make sure they are serving the section to a tenant who is in an assured tenancy agreement so this cannot be used for regulated tenancies or those in lodging agreements.

In addition, there must be a month’s notice given until the tenant has to pay more rent.

A landlord issuing a section 13 in a periodic tenancy

Do you need to follow electrical safety standards in a periodic tenancy?

Electrical safety standards must be followed in a periodic tenancy agreement because the tenancy is an assured tenancy and the tenancy is protected by the housing act of 1988.

This legislation states that every tenant has the right to a safe home. As a result, under the law, a landlord must provide an Electrical Installation Conditions Report (EICR) which produces a valid electrical safety certificate every five years.

How do deposits work in a periodic tenancy agreement?

Deposits aren’t that different to any other type of tenancy agreement, It is the landlord’s job to charge a deposit at the start of a tenancy and protect it within a tenancy deposit scheme within 30 days of the payment.

A landlord also cannot charge more than 5 weeks of rent. For example, if a tenant pays £50 of rent every week in a HMO with a landlord licence for assured periodic tenancies, the maximum deposit that can be charged is £250.

In the same way, if a tenant in a periodic tenancy agreement wants their deposit back, depending on how the deposit was protected in a tenancy deposit scheme, they would have to ask the landlord or contact the tenancy deposit scheme and it would be paid out. Any disputes as to how much of the agreement can be kept by the landlord is able to be settled by the protection scheme.

In conclusion

Wrapping things up, periodic tenancies are probably the most flexible type of tenancy agreement which is why they appeal to both the landlord and the tenant in different cases.

Sometimes, a more secure type of tenancy such as those where there are fixed terms is preferred but this is up to the decision of the tenant to know what tenancy agreement they want to sign up for.