WHILE fixed term tenancy agreements have expiry dates, the agreement is not automatically terminated if neither the tenant nor landlord give 30 days notice of their intention not to renew it.
If the tenant continues to live in the property and pay rent, it becomes a periodic tenancy.
The Property Exchange Business development manager Siobhan Payne explains the advantages and disadvantages of this situation.
A fixed-term tenancy has a set start and end date and both parties are required to give 30 days notice in writing if they do not intend the renew the agreement.
A periodic tenancy does not have an end date and can continue indefinitely.
The owner can end it at any time without having to wait for an expiry date.
However to end this agreement they need to give 60 days notice, or 30 days if the property has been sold and the owner is required to hand over vacant premises.
A periodic tenancy agreement may be beneficial if the owner is considering selling or moving back into the home, as it gives them more flexibility in asking the tenants to vacate.
On the other hand, there is a lack of security for the owner, as the tenant only needs to give 21 days written notice of their intention to end the agreement.
If owners are considering starting a new agreement as a periodic lease, or letting an existing agreement roll over, I recommend they contact their insurance companies, particularly their landlord insurance provider, to check their coverage.
Previously landlord insurance providers would not cover an owner if they started a new lease as a periodic agreement. They had to start a new tenant on a fixed term lease agreement and then roll over to a periodic agreement at the end of the fixed term lease.
This has changed and some insurers will now cover landlords who start a tenancy with a periodic lease as long as there is a written lease in place and a bond of at least four weeks’ rent, however this may not apply to all insurers, so it is worth checking to ensure they are fully covered. n