What is a periodic tenancy?

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If or when the Renters Reform Bill comes into force, all tenancies for private renters will become periodic.

In this post I explore exactly what a periodic tenancy is, what the differences are between contractual and periodic tenancies, and how the Renters Reform Bill proposes to replace assured shorthold tenancies with rolling periodic assured tenancies.

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>> Related Post: What exactly is an assured shorthold tenancy?

What are different types of periodic tenancies in England?

A periodic tenancy is a type of tenancy that does not have a fixed term for (say) 6 months or 12 months. Instead, it rolls from one rent period to the next until either the landlord or tenant terminates it by serving notice. This can be from month to month (a monthly periodic tenancy), or from week to week (a weekly periodic tenancy), depending on whether the rent is payable monthly or weekly.

There are two different types: a statutory periodic tenancy and a contractual periodic tenancy.

If the rent was payable monthly during the fixed term, as is usually the case with the vast majority of ASTs, when the tenancy becomes periodic (either contractual or statutory), the tenant can terminate the tenancy with at least one month’s notice to expire on a rent payment date.

The landlord, on the other hand, needs to give the statutory notice period under Section 21 of the Housing Act 1988, currently two months, or using a Section 8 ground for possession.

The system is a little different in Wales since the introduction of occupation contracts in December 2022. Click here to find out about periodic occupation contracts in Wales.

What is a statutory periodic tenancy?

Most assured shorthold tenancies (ASTs) in England are initially granted for a fixed term of either six or twelve months. When this fixed term ends, if the tenancy is not ‘renewed’ (which means the parties enter into another fixed term), the effect of Section 5 Housing Act 1988 is that the tenancy will continue as a periodic tenancy, and the tenant can remain in possession of the property. Consequently, it’s referred to as a statutory periodic tenancy, as it is created by Section 5 of the 1988 Act.

This happens automatically, even if the agreement doesn’t have clauses which turn it into a contractual periodic tenancy.

Here is an example of a tenancy agreement which specifically refers to the creation of a statutory periodic tenancy:

Statutory periodic tenancy reference in tenancy agreement

References to “the Term” or “the Tenancy” include any extension or continuation of the Agreement or any statutory periodic Tenancy which may arise following the expiry or determination of the period of the Term specified in clause 1.

Clause 1: The Landlord lets to the Tenant the Property for a fixed 12-month period. The Tenancy shall start on and include [date] and shall end on and include [date].

Although the above clause refers to a statutory periodic tenancy, if the agreement didn’t refer to it at all, a statutory periodic tenancy would still automatically arise. This also means that letting agents who charge to “arrange” a statutory periodic tenancy are actually charging for not doing anything if they’re not increasing the rent at the same time.

What is a contractual periodic tenancy?

A contractual periodic tenancy, on the other hand, arises when the agreement contains a clause that says what will happen to the tenancy at the end of the fixed term.

Example of creation of contractual periodic tenancy in tenancy agreement

The Landlord lets to the Tenant the Property for a fixed 12-month period (“Initial Term”), and then continuing as a monthly contractual periodic tenancy until terminated in accordance with this agreement

What is the main difference between a contractual and a statutory periodic tenancy

The main difference is that when the fixed term ends and it becomes a contractual periodic tenancy, the tenant remains liable for council tax until the end of the tenancy. With a statutory periodic tenancy, the tenant is only liable for council tax until the day they move out.

Let’s take the example of a fixed term period ending on 21st December 2023, after which it became periodic. The tenant gives one month’s notice to expire on 21st May 2024, but they move out on 15th May. With a statutory periodic tenant the landlord is liable for the rent from 15th May. For a contractual tenancy on the other hand, the tenant remains liable until the end of the tenancy on 21st May, even though the tenants moved out on 15 May.

Incidentally, under the Renters Reform Bill, tenants of assured tenancies (which will be periodic) will continue to be liable for council tax until the end of the tenancy even if they vacate the property and leave it unoccupied before the end of their tenancy.

>> Related Post: What landlords need to know about Council Tax liability

What are the advantages and disadvantages of periodic tenancies?

For the tenant, a periodic tenancy gives them flexibility. This means they can terminate the tenancy agreement whenever they like by giving at least one month’s notice to quit.

The landlord too has flexibility and is a good option if they have concerns about the tenant, as they’ll be able to serve a Section 21 notice to regain possession with two months’ notice. (Assuming they’ve complied with the relevant landlord obligations). They can also increase the rent using a Section 13 notice once every 12 months.

Some tenants like to have certainty that they have security of tenure for the next period and know that the landlord can’t increase the rent during that time. Only a fixed term tenancy can give this to the tenant.

It’s the same for the landlord. Many landlords like to have the certainty that the tenant will stay there for another fixed term, without worrying if they’ll serve a notice to quit at any time.

>> Related Post: How to increase rent using a Section 13 Notice

What happens to a deposit when fixed term tenancy turns into a periodic tenancy?

The deposit will stay protected for the duration of the tenancy.

As the tenancy doesn’t end at the end of the fixed term, assuming the tenants stay, the deposit can stay in place and won’t need to be re-protected. The landlord won’t need to serve the prescribed information again either unless they move to another scheme, or increase the deposit.

How much notice does tenant need to give landlord to terminate a periodic tenancy?

A tenant needs to give a landlord at least one month’s notice to quit to terminate a tenancy agreement that rolls from calendar month to calendar month. The notice needs to expire at the end of the following tenancy period.

Here is an example. If a tenancy rolls on a month-to-month basis from the 3rd of each month, the first day of the tenancy period is the 3rd and the end of the tenancy period is the 2nd of the month. Therefore, if the tenant wants to move out on 2 February, they will need to serve at least one calendar’s month notice, plus allowing enough time for service of the notice. For first class post, the tenant needs to allow two business days for postage. In order to be on the safe side, a tenant would need to serve notice on 30 January, or even earlier if it’s over a weekend. If the tenant gives notice on 3 January, it will be too late to bring the tenancy to an end on 2 February, and the tenancy will end on 2 March.

It’s possible to have a shorter period if the tenant serves the notice in person or by courier. However, it will only count as being served on a particular day if it’s before 4:30pm and it’s a business day. Tenants can only give a valid notice to quit by email if it’s included in the tenancy agreement.

A tenant can’t give notice to quit in the middle of a fixed term tenancy, unless there’s a break clause. They’ll have to wait until the end of the fixed term, unless the landlord agrees to let them leave earlier.

How the Renters Reforms Bill proposes making periodic tenancies compulsory

woman reading about the key changes in the renters reform bill on an ipad
The White Paper published by the Department for Levelling Up, Housing & Communities

Clause 1 of the draft Renters Reform Bill abolishes fixed term tenancies and states that all assured tenancies will be “periodic with rent period not exceeding a month”. This means that all tenancies would become statutory periodic tenancies if the Bill comes into force.

This has not been popular with private landlords who offer accommodation to students, as their business model operates on the basis of fixed term tenancies that dovetail with the academic year. Despite intense lobbying, the Bill has not been amended to create an exception for all student accommodation, not just purpose built student accommodation.

>> Related Post: The 10 key changes in the Renters Reform Bill

Watch this space – I regularly update this article

Last updated: 20 May 2024

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