Fixed-Term Tenancies
Advantages
A fixed-term gives both parties some surety as to the length of time the tenancy will last. The landlord can rest safe in the knowledge (all things being equal) that he will have rent payments being made for the whole fixed-term period. Conversely, the tenant is comforted in the knowledge that they have security of tenure. It also provides absolute clarity on the tenancy end date which can help when settling final utility bills / council tax and or deposit disputes.
Disadvantages
As long as a tenant meets his tenancy obligations, they can be sure of occupation until at least the end of the fixed-term. This therefore takes away landlords flexibility in recovering possession if required. It also means that other terms, such as the right to review the rent, are also foregone unless specifically included in the tenancy wording.
Periodic Tenancies
Advantages
In most cases we advise landlords let initially on a 6 or 12 month fixed-term unless there are exceptional circumstances to the contary. We feel it is best that the tenant has proved themselves before committing to a longer term. Once the fixed term expires, unless steps are taken to bring the tenancy to an end or fix for a further term, the tenancy automatically becomes periodic running month by month. This then gives landlord flexibly on recovering possession if their circumstances change and also the ability to vary other terms of the tenancy such as the rent.
Disadvantages
The main disadvantage to landlords with tenants on periodic tenancies is the fact the tenant can up and leave fairly quickly (in most cases just one months notice) and therefore have no long term surety of income.
Also with a tenancy that has been periodic for some years, the terms of the original agreement, which may have been affected by subsequent changes in legislation (Deposit protection , Tenant Fees Act etc) may become out of date.
To renew or not is determined by landlords individual circumstances and should be given careful consideration. If you have any questions regarding Fixed term Vs Periodic tenancies or indeed the tenancy renewal process feel free to contact lee@purepropertylettings.co.uk