Periodic Tenancies – Difference Between Statutory And Periodic Tenancies
The majority of rental agreements in the United Kingdom are for a fixed time period. While the fixed term will commonly be for six or 12 months, the rental period can be as long or as short as needed or agreed upon.
Of course, once the agreed fixed term, the tenant is not required to leave the rental property.
If a tenant holds an assured or assured shorthold tenancy (AST), they are entitled to remain the rental property on a periodic tenancy.
This periodic tenancy lasts until either the tenancy ends the tenancy and they vacate the premises or the landlord, via a court order, regains possession of their rental property.
To make sure this is the case, there are two types of periodic tenancies that occur when the fixed term ends:
- Contractual periodic tenancies
- Statutory periodic tenancies
There are differences between the two forms of tenancies, and it is important landlords familiarise themselves with these differences. Both the tenancies have their positive elements, and their drawbacks, and one might be more suitable for a landlord, than the other.
What is a contractual periodic tenancy?
With this style of tenancy, the tenancy runs on an agreed term, such as from month to month or even week to week. There should be a clause in the tenancy agreement outlining the nature of periodic tenancy which starts when the fixed term ends.
The wording of this agreement is usually seen as a continuation of the fixed term.
The fixed term and periodic tenancy are viewed as the same tenancy. This is crucial for council tax purposes.
What is a statutory periodic tenancy?
When there isn’t a specified or stated clause regarding the continuation of the tenancy after the fixed term ends, the statutory periodic tenancy is relevant.
For this style of tenancy, Section 5 of the Housing Act 1988 is followed, and it creates an all-new tenancy agreement. This new tenancy agreement is referred to as the statutory periodic tenancy.
This tenancy runs on a basis of how the last rent was paid. If rent was paid weekly, the tenancy will run from week to week. If the rent was paid monthly, the tenancy will run from month to month.
It is vital landlords are aware that this style of tenancy represents a brand-new tenancy, one that is separate from the original fixed term tenancy. This impacts council tax payments, deposits and even the service of documents.
We know many landlords might be unaware of what tenancy agreement they have, but help is available. At Regal Estates in London, we are more than happy to offer guidance, and our range of property management services will ensure you don’t need to worry about this aspect of caring for your rental property and tenants.
If you are interested in our lettings or property management services or you are looking to buy, sell, let or rent property in or around North West London, call us on 020 8459 2530 and a member of our estate and letting agent team will be happy to help.