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9th Aug 2023|Lettings|

Everything You Need To Know About Periodic Tenancies

The Renters Reform Bill, which is currently being reviewed by parliament, is set to shake up the way tenancies across the UK are regulated. The Bill seeks to make it easier for tenants to rent with pets, provides greater notice periods, and gives landlords more power to remove rogue tenants. However, one of the most important proposals from the bill is the move away from using Assured Shorthold Tenancies and towards Periodic Tenancies as standard. This is sure to have a huge impact on tenancies – but what exactly does this change entail? What are periodic tenancies? And how will this impact you?

What Does Periodic Tenancy Mean?

By definition, a periodic tenancy is a rolling tenancy that is renewed on a regular basis. They typically run on a monthly basis, but can be renewed on a more or less frequent basis. These tenancies have no projected end date, and continue to renew until the tenant or landlord terminates the rental agreement.

The flexibility of these types of tenancy can be beneficial to both tenants and landlords. Tenants are not tied into long-term fixed contracts, which is helpful for those who are waiting on a property purchase to complete or who may need to move for work. Similarly, landlords seeking to take back possession of their unit or sell parts of their property portfolio can benefit from the short-term structure of a periodic tenancy agreement. This flexibility for both tenants and landlords makes the proposed changes to periodic tenancies as standard in the Renters Reform Bill a welcome change for many.

Periodic Tenancy vs. Assured Shorthold Tenancy

At the time of writing, the vast majority of tenancies will begin with a term of 6 or 12 months. These are assured shorthold tenancies that agree to a minimum specific time period of tenancy. These then move towards another longer term contract renewal or a periodic tenancy structure whereby payment is taken month-by-month.

What Does Statutory Periodic Tenancy Mean?

A statutory periodic tenancy begins when the aforementioned assured shorthold tenancy concludes. Once this fixed term ends, the tenancy renews itself automatic on a rolling, periodic basis. No formal contract renewal is required. So long as the tenant continues to pay rent, and the landlord accepts this rolling tenancy, the tenancy will automatically continue as a statutory periodic tenancy.

What Does Contractual Periodic Tenancy Mean?

Unlike statutory periodic tenancies, contractual periodic tenancies are agreed within your tenancy agreement. The move from fixed term to periodic tenancy can be agreed shortly before the fixed term ends, or when the tenancy agreement is initially signed. You may also enter a contractual periodic tenancy from the very beginning of your tenancy agreement by setting your initial term as one week or one month.

How Long Can A Periodic Tenancy Last?

Periodic tenancies will continue to roll on until either the tenant or landlord decides to terminate the tenancy. Therefore, a periodic tenancy can last indefinitely.

Can Landlords Increase Rent During Periodic Tenancies?

Many periodic tenancy contracts will have a set ‘rent review’ clause which allows the landlord to reconsider and adjust their rental charges having assessed market trends. Generally speaking, this should only happen once per year. Alternatively, landlords can issue a Section 13 notice to tenants as a means of pursuing a rent increase. This, too, can only be issued once per year. A rent increase can be issued once the initial 6 month fixed term ends. However, it cannot be issued within the first 12 months of a tenancy. What’s more, a rent review clause and Section 13 notice cannot be used in tandem. Landlords can only utilise one of these means of issuing a rent increase each year. 

Landlords need to provide at least one month notice of any changes to your tenancy, and tenants must formally agree to this change. This usually happens by responding to the landlord’s request via email or text, signing a new agreement with the new rent included, or simply paying the increased rent.

How Do I Serve Notice On A Periodic Tenancy?

Under the new rules proposed by the Renter’s Reform Bill, renters can provide two months notice at any point in their tenancy. 

When it comes to ending your rolling tenancy contract, this can be done by simply coming to an agreement with your landlord, or by providing a legal notice to quit. Please note that tenants are still expected to pay rent until the agreed vacation date.

Stay Ahead Of The Curve With Centrick

Are you up to date with the proposed changes of the Renters Reform Bill? This new legislation is set to change the way tenancies work across the UK in a huge way, and it’s important for landlords and tenants alike to prepare for these changes. 

At Centrick, our team of residential property experts is on hand to help you understand this new legislation and how it can impact your property decision making. Have any queries regarding the Renters Reform Bill or upcoming changes to periodic tenancies? Simply fill out the form below…

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