A periodic tenancy is a tenancy which runs from month to month, or less commonly from week to week. Some run from quarter to quarter or even year to year, but the vast majority run from month to month.
Periodic tenancy v. fixed term tenancy
Most people think of a tenancy as being granted for a period of time, typically six months or a year. Very few tenancies, in the private sector anyway, start out by being periodic. This generally happens when the fixed term ends.
If the tenancy is an assured shorthold tenancy (which most are) the Housing Act then provides that it will run on, on a month by month or week by week basis, depending on how the rent is paid.
Lets say John Brown has a six month tenancy of 32 Astreet, which runs from 23 January, and that he pays £500 per month. At the end of the fixed term he stays on in the property.
Under the Housing Act (section 5) therefore, he will then have a monthly periodic tenancy. This will start immediately after his old tenancy ended on 22 July and so the ‘period’ will be from the 23rd day to the 22nd day in the month. Or you could also say that a new period will start on the 23 day of every month.
The rent will be the same and the terms will be the same as the terms and conditions of the preceding fixed term tenancy agreement.
This will generally also happen even if you don’t have an AST. If the tenant stays on after the end of the fixed term and pays rent which the landlord accepts, then a periodic tenancy will be implied.
So it is quite wrong when people say that people staying on after the end of the fixed term don’t have a tenancy, or even that they are squatters. They are proper tenants with a tenancy agreement.
Statutory periodic tenancy v. contractual
If a tenancy arises because an act of Parliament says it will, this will be a ‘statutory periodic tenancy’. For example if an AST runs on after the end of the fixed term.
However generally this term is used for Rent Act tenancies where the original ‘protected tenancy’ is ended by a Notice to Quit but the tenant is entitled to stay on. Why are they entitled to stay? Because statute says so (which is why it is called a ‘statutory’ tenancy). These tenants are generally very difficult to evict (unlike assures shorthold tenants).
A periodic tenancy however will be ‘contractual’ if it exists because the parties have agreed that it will. Rater than because of a statute.
Is a periodic tenancy a good idea?
One reason why many people don’t know about periodic tenancies is because letting agents always insist on doing ‘renewals’. This is often done simply because it is something they make a charge for, irrespective of whether it is in anyone’s interest to have a further fixed term.
A renewal can be a good idea, as it gives both landlord and tenants security for a further period. It is also a good opportunity for the landlord to increase the rent.
However sometimes they are not a good idea. If the tenant’s plans are uncertain for example, and he thinks he may be posted to Aberdeen for his work, he should not sign a new 12 months fixed term!
Landlords are best advised to allow a tenancy to run on as a periodic tenancy if the tenant is proving problematic, as then if the situation deteriorates they will not have to wait until the end of the fixed term to evict them from the property.
Giving a new fixed term to a tenant you are unhappy with and have considered evicting due to their bad behaviour is NOT recommended.
Creating a periodic tenancy from the beginning
It is also possible to give a tenant a periodic tenancy from the start rather than a fixed term of six months or a year. You do this by giving them an initial term of just one month (or a week, or four weeks) and then just allowing it to run on.
For example you can do this using any of the Landlord Law tenancy agreements.