Fixed-Term vs Periodic Tenancy Agreements UK

Choosing between a fixed-term and periodic tenancy can make or break your rental investment. With the Renters’ Rights Bill set to abolish fixed-term tenancies by 2026, understanding both options is crucial for landlords making decisions today.

What is a Fixed-Term Tenancy?

A fixed-term tenancy runs for a set period with a clear start and end date. Most last 6-12 months, though they can be longer or shorter.

Key features:

Definite end date (e.g., 6 months, 12 months)
Usually Assured Shorthold Tenancies (ASTs)
Both parties bound by the agreement for the full term
Tenant can’t leave early without penalty (unless break clause exists)

What is a Periodic Tenancy?

A periodic tenancy has no fixed end date and runs on a rolling basis – typically month to month or week to week.

Key features:

No set end date
Automatically renews each rent period
Either party can end with proper notice
More flexible for both landlords and tenants

Two Types of Periodic Tenancy

Statutory Periodic Tenancy:

Happens automatically when a fixed-term AST expires
Tenant stays and landlord accepts rent
Creates a completely new tenancy under Section 5 Housing Act 1988

Contractual Periodic Tenancy:

Agreed in the original tenancy contract
Specified what happens after the fixed term ends
Often better for landlords as terms are clearer

Fixed-Term Tenancy: Pros and Cons

Advantages for Landlords

Guaranteed rental income for the agreed period
Reduced tenant turnover and void periods
Easier financial planning and budgeting
Legal certainty – clear rights and obligations
Tenant stability – can’t leave without penalty

Disadvantages for Landlords

Limited rent increase options during the term
Difficult to remove problem tenants early
Less flexibility if circumstances change
Potential void periods if tenant doesn’t renew
Can’t use Section 21 during fixed term (without break clause)

Rent Increases During Fixed Terms

You can only increase rent during a fixed term if:

There’s a rent review clause in the agreement
The tenant agrees to the increase
Otherwise, you must wait until the term ends

Evicting Tenants During Fixed Terms

During a fixed-term tenancy, you can only evict using:

Section 8 notice for fault-based reasons (rent arrears, breach of contract)
Break clause if included in the original agreement (rare)

Most landlords avoid break clauses as they allow tenants to leave early too.

Periodic Tenancy: Pros and Cons

Advantages for Landlords

More flexibility to end the tenancy
Can increase rent annually with Section 13 notice
Can use Section 21 and Section 8 notices
Easier to remove problem tenants
No renewal paperwork needed

Disadvantages for Landlords

Less rental income security – tenants can leave anytime
Potential for more void periods
Reduced bargaining power with tenants
Income uncertainty makes financial planning harder
More tenant turnover costs

Notice Periods for Periodic Tenancies

Tenants must give:

At least 1 month’s notice for monthly tenancies
At least 1 week’s notice for weekly tenancies
Notice must end on the last day of a rental period

Landlords must give:

2 months’ notice with Section 21
Various notice periods with Section 8 (depending on grounds)

What Happens When a Fixed Term Ends?

When your fixed-term tenancy expires, you have 3 options:

1. End the Tenancy

Serve appropriate notice to regain possession
Find new tenants
Opportunity to increase rent to market rates

2. Renew with a New Fixed Term

Sign a new 6-12 month agreement
Chance to update terms and increase rent
Provides continued security for both parties

3. Let it Become Periodic

Happens automatically if tenant stays and pays rent
No paperwork needed
Continues on same terms as original agreement

The Renters’ Rights Bill: Game Changer

Major changes coming in 2026:

All new tenancies will be periodic from day one
No more fixed-term tenancies allowed
Existing fixed terms will convert to periodic
Section 21 “no-fault” evictions abolished
Only Section 8 grounds for possession allowed

This means landlords need to prepare for a periodic-only future.

Which Should You Choose Right Now?

Choose Fixed-Term If:

You want guaranteed income for a set period
You prefer less tenant turnover
Your tenants want security and stability
You’re new to landlording and want predictability

Choose Periodic If:

You want flexibility to increase rent or regain possession
You’re dealing with uncertain or problem tenants
You prefer less paperwork and admin
You want to prepare for the post-2026 landscape

Rent Increases: The Rules

Fixed-Term Tenancies

Need rent review clause or tenant agreement
Usually 1-3 months’ notice required
Can’t increase without proper clause

Periodic Tenancies

Use Section 13 notice once per year
Minimum 1 month’s notice for monthly tenancies
Must follow prescribed format

Council Tax Implications

Important difference between tenancy types:

Statutory Periodic: Tenant only liable for council tax until they move out

Contractual Periodic: Tenant liable until end of notice period, even if they leave early

This can affect your bottom line if tenants leave mid-notice period.

Deposit Protection Rules

Good news: When a fixed term becomes periodic, your deposit protection continues automatically. You don’t need to:

Re-protect the deposit
Serve prescribed information again
Unless you change schemes or increase the deposit

Templates and Documentation

Proper tenancy agreements are essential regardless of which type you choose. Our free template can be customised for both fixed-term and periodic tenancies, ensuring you’re legally compliant and protected.

Key clauses to include:

Clear rent review procedures
Maintenance responsibilities
Notice periods and procedures
What happens at the end of the term

Common Landlord Mistakes

With Fixed Terms:

Not including rent review clauses
Adding break clauses unnecessarily
Assuming they can evict easily during the term

With Periodic Tenancies:

Not understanding notice period requirements
Failing to serve proper Section 13 notices for rent increases
Confusing statutory and contractual periodic rules

Student Properties: Special Considerations

The Renters’ Rights Bill poses particular challenges for student landlords who rely on fixed terms aligned with academic years. Consider:

How to manage seasonal demand with periodic tenancies
Alternative approaches to secure student tenants
Potential use of permitted additional payments

Preparing for 2026 Changes

Start planning now:

Understand how periodic tenancies work
Review your current agreements
Consider which tenants you want to keep long-term
Prepare for Section 8-only evictions
Build stronger tenant relationships

Professional Help and Management

Many landlords benefit from professional property management, especially with periodic tenancies requiring more active management. Consider professional help if you:

Manage multiple properties
Don’t have time for hands-on management
Want expertise in changing regulations
Need help with legal compliance

Key Takeaways

Fixed-term tenancies offer:

Security and predictable income
Less tenant turnover
But limited flexibility during the term

Periodic tenancies provide:

Flexibility for rent increases and possession
But less income security and potential for more voids

The future is periodic-only – start preparing now for the changes ahead.

Remember: Regardless of tenancy type, maintain good tenant relationships, keep proper documentation, and stay compliant with all legal requirements. The best tenancy structure is the one that works for your specific situation and property portfolio.

With major changes coming, understanding both options helps you make informed decisions for your remaining fixed-term opportunities while preparing for the periodic-only future.