PERIODIC OR FIXED TERM – WHAT IS THE DIFFERENCE…

There are two types of tenancy agreements a tenant can enter into. A fixed term agreement and a periodic tenancy agreement.

A fixed term tenancy has a definite commencement date and expiry date. A periodic agreement has a commencement date but no expiry date.

The preferred type of tenancy is a fixed term agreement where a tenant will enter into a 6 or 12 month agreement to give both parties security of tenancy and income for a set period of time.

Tenancy agreements do not necessarily have to be for a 6 or 12 month term. Sometimes it is smart practice to enter into a varied term (i.e. 5, 8 or 10 month tenancy) if the property has a pool to avoid the property becoming available in the middle of winter. A varied term can also be entered into to avoid the property becoming available during a quiet time of the year when it can become harder to find a tenant.

While fixed term tenancies are generally the preferred type of agreement with both tenants and landlords, sometimes it can be beneficial to enter into a periodic tenancy. You can enter into a periodic tenancy at the commencement of the tenancy by stating a move in date with no expiry date, or if a fixed term agreement is not
renewed for a further term, it will automatically revert to a periodic tenancy.

Periodic tenancies can give both parties flexibility in giving notice as there is no expiry date and notice to vacate the property can be given at anytime in accordance with a periodic tenancy notice period. This flexibility is usually requested if the landlord wishes to sell the property or the tenant is looking to purchase a property.