Why I prefer fixed-term tenancies

by Victoria Whitlock

Most tenancies start off as a fixed-term, usually 6 to 12 months, although I would always recommend that any contract for longer than 6 months has a break-clause.

At the end of the contract, landlords can give the tenant the option to leave (as long as the landlord gives two months’ notice), sign another fixed-term contract or switch to a periodic tenancy.

A periodic tenancy has all the same T&Cs as the original contract, but it rolls on from month to month or week by week, depending on whether the rent is paid monthly or weekly. Tenancies can start as periodic, although landlords cannot evict a tenant during the first six months.

So what are the pros and cons of fixed-term v periodic tenancies?

Personally I prefer to keep all my tenants on fixed-term contracts because I like to know that they are locked in for the first six months, so for half the year I know that I won’t have the hassle of looking for new tenants or arranging with letting agents to re-market a property.

Also, I like to avoid the possibility of tenants leaving at times when it would be awkward to re-let my properties, say during December in the run up to Christmas, or in February and March when the market is pretty dead. I mean, who wants to do viewings in the middle of winter?! For this reason, I’ll time the break clause in contracts to avoid these months.

That said, if I’ve had a great tenant for a number of years who requests to switch to a periodic tenancy, I wouldn’t be averse if they really required that flexibility. A little give and take is essential in this business, I think.

With periodic tenancies, tenants only need to give a month’s notice when they want to leave ( or two months if you state this in the original contract), which means that at any time of the year you could be forced to start looking for new tenants with no more than 48 days notice.

However, when tenants reach the end of a fixed-term contract, they can (and sometimes do) leave without giving landlords any notice of their intentions, so at least if they’ve rolled on to a periodic you’ll get at least a month’s warning that they’re planning to go.

Also, periodic tenancies allow the landlord to increase the rent at any point (although not more than once every 12 months), subject to giving the tenant sufficient notice.

Also, if you need to repossess the property, you only have to give the tenant two months’ notice, rather than waiting for the end of a fixed-term.

At the end of the day, it’s a business decision and what suits landlord might not be the right choice for another. Be aware that letting agents will try to persuade you to opt for a new fixed-term contract so they can charge more fees, but you can resist this if it’s not the best decision for you.