What happens when a tenancy's fixed term ends?
Most assured shorthold tenancies have a fixed term of six or twelve months. There are always exceptions of course but most tenancies will fit into that bracket. The tenancy agreement will specify the length of the fixed term. What happens at the end of that fixed term depends on whether the tenant moves out or remains in the property.
The tenant moves out
It'll be no surprise that if the tenant leaves the property at the end of the fixed term the tenancy ends. The tenant is no longer obliged to pay rent. Of course, the tenant can't leave before the end of the tenancy. Or they can, but they will still be liable for the rent until the contract ends. Alternatively, the tenant could arrange to surrender the property and pay a compensation figure to the landlord.
But let's assume the fixed term has ended and the tenant decides to walk away. They are entitled to do this. When it happens the private landlord takes back possession of the property and prepares it for the next tenant.
But there are other scenarios to consider if the tenant chooses to remain in the property.
Section 21 notice
As the fixed tenancy draws to a close the landlord can serve a Section 21 notice. This gives the tenant two months' notice to move out when the tenancy ends.
A private landlord may choose to do this because the tenant has been causing problems or simply because they have other plans for the property. They may do it simply as a matter of course. Whatever the case, as long as the Section 21 notice is valid the tenant must leave the property at the end of the fixed term. However, the landlord could choose not to enforce the possession order.
New tenancy agreement
The landlord can offer the tenant another fixed term tenancy. This way the rent can be increased while retaining the tenant. As long as they are agreeable of course. The new fixed term can be for whatever period of time the landlord wishes. But again, six or twelve months is the norm.
The tenant remains in the property
What happens if the tenant remains in the property at the end of the fixed term? And the landlord is happy for them to remain without signing a new tenancy agreement? If this is the case a new periodic tenancy automatically comes into force.
A periodic tenancy, as the name suggests, is for a period equal to the regularity of the rent payments. As most private landlords collect the rent on a monthly basis periodic tenancies tend to be for a month. They then automatically roll over to the following month. The previous tenancy agreement remains in force as does the level of the rent. The periodic tenancy continues until the landlord or the tenant decides to end it.
Terminating a periodic tenancy
A private landlord can end a periodic tenancy by serving a Section 21 notice (different form this time though). The landlord must give two months' notice and specify the date the tenant must leave.
If it's the tenant who decides to end the periodic tenancy they must give the landlord one months notice. The notice must end on the last day of the tenancy rollover.
Why do landlords allow periodic tenancies?
The benefit of having a tenant sign a new fixed term contract is the opportunity it presents to increase the rent. So why then do some private landlords allow periodic tenancies? In some cas,es periodic tenancies can roll on for years.
It may simply be the landlord doesn't want to rock the boat. The tenant is no bother, they're paying the rent and the landlord is quite happy for the arrangement to continue. In this case it makes sense to just let the periodic tenancy carry on.
Another example may be the landlord has plans for the property shortly after the fixed term ends. But keeping the tenant on temporarily provides rental income.
But a periodic tenancy provides flexibility for the landlord. And the tenant as well of course. Sometimes it's this flexibility which is the attraction for both parties.
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