The vast majority of tenancies in the UK are Assured Shorthold Tenancies (AST) where there is a fixed minimum term, typically 6 months and regular rent payments, typically monthly. There are, however, many other types of tenancy such as non-assured tenancies, assured tenancies, regulated tenancies, excluded tenancies and periodic tenancies. In this blog article we will focus specifically on periodic tenancies as they tend to cause some confusion.
What is a Periodic Tenancy?
In the most basic terms, a periodic tenancy is a short running tenancy which is, mostly, easy and quick to terminate. These can be as short as a week, if that is what is agreed.
There are two types of periodic tenancy: Statutory periodic tenancy and contractual periodic tenancy and these have different rules.
Statutory Periodic Tenancy
A statutory periodic tenancy is formed when a fixed term tenancy agreement such as an AST comes to an end and no new agreement has been signed. This is governed under Section 5 of the housing Act 1988 which states that if a tenant stays in a property after the fixed term has expired, with no new contract, a new periodic tenancy is created automatically. Most of the same contractual conditions apply, such as the rent payable and the periodicity of rent payment. So, if the rent was previously paid monthly then the same payment terms extend to the periodic tenancy.
Contractual Periodic Tenancy
A contractual periodic tenancy is where there is a specific periodic tenancy agreement in place, or a clause in the AST which allows for a periodic tenancy at the end of the fixed term. Typically, it is the latter, which is used, where the AST specifically states that the contract will continue as a periodic tenancy after the end of the fixed term. It is important to check your contract as there are differences between contractual and statutory periodic tenancies.
Ending a Periodic Tenancy
One of the main differences between a contractual and statutory tenancy is around termination.
The first thing to take into account here is that there are 4 ways that a tenancy can be ended:
- Both parties mutually agree to the end of the tenancy
- The tenant serves the landlord with a notice to quit
- The landlord decides to evict the tenant under a section 8 notice
- The landlord gives notice to the tenant under a section 21 notice
Periodic Tenancy Notice Periods
For statutory periodic tenancies, the notice period for tenants to give to the landlord is, at a minimum either 1 month, if the fixed term had monthly rental payments or 4 weeks if rent was paid weekly. If the “period” is greater, such as quarterly, i.e. rent is paid quarterly, then the notice period for the tenant to proffer would be 3 months.
As far as contractual periodic tenancies are concerned, the notice period will be as specified in the original contract.
For landlords there is a slight difference in the applicable notice periods. For a statutory periodic tenancy, the landlord must give a minimum of 2 month’s notice in writing using a section 21 notice. For contractual periodic tenancies, this is the same if the rental period is 1 month but if the rental period is longer such as quarterly the landlord must give 3 month’s notice. The additional legislation here is that the notice must expire on the day before the next rent payment is due, which could mean an extended notice period.
Periodic Tenancy Rent Increases
In a contractual periodic tenancy, it is likely that there is a rent review period specified in the contract and, as long as that review period is fair, the rent increase reviews can take place as specified. If there is no rent review clause then the landlord must use a section 13 form 4 from the Housing Act 1988 to propose a new rent. There are some requirements, though:
- There has to be a notice period for the increase:
- 1 month for rents which are paid monthly or less
- 6 months for yearly rental payments
- A period equal to the rental payment period in all other cases, e.g. 3 months for quarterly.
- The rent increase cannot take effect less than 52 weeks after the tenancy started or the most recent rent increase happened
- The increased rent must start on the same day of the month that the rent is currently being paid on.
In a statutory periodic tenancy, there will be no rent increase clause applicable as any that was in the fixed term contract will have expired. As such the landlord would need to use the section 13 form. The notice periods are the same but there is no need to wait the 52 weeks, the landlord can propose a rent increase immediately after the fixed term has ended.
Council Tax and Periodic Tenancies
Under a contractual periodic tenancy, the tenant is responsible for paying council tax for the period they are in the property and for the full notice period, even if they move out before the end of the notice period.
In the case of a statutory periodic tenancy, they are only liable for council tax for the period they live in the property. If they move out before the end of the notice period, their liability for council tax ends when they move out and this passes to the landlord.
There are a lot of advantages with periodic tenancies, but there are complexities too and the rules for the different types of periodic tenancy do differ. If you decide to enter into a periodic tenancy situation or fall into one simply virtue of the fixed term contract expiring, it is important to know what rules need to be followed.
The information contained in this article was correct at the time of publishing. This article is for general information purposes only and should not replace professional advice. If you have any queries regarding periodic tenancies, it is always advisable to seek appropriate legal advice.
