A periodic tenancy is a tenancy that has no end date so in simple terms a rolling contract. At the moment we have fixed tenancies, which can roll to periodic tenancies if a tenant has run to the end of their Assured Shorthold Tenancy and not signed a new tenancy agreement.
Perhaps one of the biggest surprises from the Government’s white paper released back in June 2022 was the Government’s plan to move all tenants onto a single system of periodic tenancies. The intention was to provide greater security for tenants but retain flexibility if tenants’ circumstances change.
Currently a landlord can end a periodic tenancy with 2 months’ notice by serving a section 21 Notice or using any of the grounds for possession under Section 8. With Section 21 Notices being abolished, landlords will now need to rely on a ground for possession and have a reason to evict. The grounds for possession have been re-drafted and are likely to still undergo further scrutiny and amendments.
Periodic tenancies are likely to create some uncertainty for landlords regarding rental income as tenants will no longer be tied into fixed term contracts. Under the proposed reforms tenants will be able to give 2 months’ notice to vacate at any point. This effectively means tenants could move into a property and then give notice to leave the next day.
A major concern following the announcement of periodic tenancies is for landlords who let to students. Official university accommodation is to be exempt under the new rules, however students that rent in the private rented sector are not.
Periodic tenancies could disrupt student landlords’ business models. Landlords could face void periods over the summer months when students leave University, or if their tenant decides to leave after 2 months’ notice, they could end up having to wait until the next academic year when students look for properties again.
There have been some rumours in the papers that Michael Gove is back tracking on the periodic tenancies for the private rented sector but no concrete announcements from the Government.
A petition has been launched on the Parliament website to reverse the provisions in the Renters Reform Bill to remove Assured Shorthold Tenancies. As at the date of this blog the petition has 2,172 and requires 10,000 signatures for the Government to respond.
It is not disputed that everyone wants a fair system for renting. There is however a housing crisis, and a balance must be struck between providing security for tenants and giving landlords the confidence that the private renter sector is a good place to invest. There is a lot more work that needs to be done on the reforms before they become law.