What is a statutory periodic tenancy?
When you rent out a property as a landlord, in most cases you will include a fixed time period within the tenancy agreement. This time period is known as the ‘term’, and the tenancy agreement will usually cover either a 6 month or a year long tenancy. When this tenancy ends, if the tenant is still in residence and the tenancy agreement that existed was an Assured Shorthold Tenancy (AST), then a statutory periodic tenancy will be created automatically if no other agreement is in place. As most modern tenancies are ASTs, the creation of a statutory periodic tenancy is the most normal result of a fixed term tenancy ending.
This new periodic tenancy will:
- Start immediately from the moment the old tenancy ends.
- Be between the same people who were landlord and tenant at the end of the AST.
- Be related to the same premises.
- Be periodic, meaning it will run for set periods of time, normally either weekly or monthly.
- Be under the same terms and conditions as the fixed term tenancy in all other respects.
How is a statutory periodic tenancy created?
A statutory periodic tenancy is created on the expiration of any Assured Shorthold Tenancy (AST) if the tenant is still in residence at the same property. As stated above, this will be on the same terms as the previous tenancy. This is as a result of Section 5 of the Housing Act 1988 – as this means the new periodic tenancy is created by statute, it is called a statutory periodic tenancy.
How do you end a statutory periodic tenancy?
To end a statutory periodic tenancy, a landlord must provide written notice of at least two months that they wish to have the property back. This is called the ‘notice to quit’, and must contain the date the tenant must leave by. Unlike ending a tenancy during an Assured Shorthold Tenancy (AST), you do not have to provide a reason for ending the tenancy.
What are the terms of a statutory periodic tenancy?
The terms of a statutory periodic tenancy are identical to those of the preceding Assured Shorthold Tenancy. The exception to this is that the new periodic tenancy will run from period to period, normally either weekly or monthly.
Can you increase the rent during a statutory periodic tenancy?
It is possible to increase rent during a statutory periodic tenancy. However, you can only do so 12 months after the start of the initial tenancy, and it cannot be done more often than every 12 months. This increase in rent is often called a Section 13 Notice.
What rights does a tenant have under a statutory periodic tenancy?
Under a statutory periodic tenancy, a tenant has a number of rights. These include the right:
- To have their deposit protected under a deposit protection scheme.
- To live in the property until such a date that their tenancy is terminated following an appropriate notice to quit, OR, they choose to move out as set out within the tenancy agreement.
- To safe living conditions within your property, including the right to expect repairs.
What benefits are there for a landlord allowing a tenancy to become a statutory periodic tenancy?
A landlord can benefit from a tenancy becoming a statutory periodic tenancy. Potential benefits can include:
- Greater flexibility for terminating the tenancy, as there is no need to wait for the tenancy to end or to find a legal reason to end it.
- No need to create a new fixed term tenancy agreement, as the terms roll over between periods.
- No risk of having to pay a lettings agency a tenancy renewal fee as the tenancy transforms into the statutory periodic tenancy automatically without having to form a new fixed term.
- The ability to raise rents or adapt a contract can be far easier, as you do not have to wait until the end of the fixed term tenancy agreement.
What disadvantages can a landlord experience under a statutory periodic tenancy?
While there are a number of advantages, there are also disadvantages associated with a statutory periodic tenancy. These are that:
- Your tenant is only required to give one month of notice that they wish to vacate, potentially not providing time to find a new tenant.
- If a statutory tenancy agreement is allowed to run for too long, the tenancy agreement it is based upon may become outdated and contain unlawful elements.
- Finding new tenants is expensive, and placing good and reliable tenants on a statutory periodic tenancy can be risky as you may lose their tenancy more easily, and could see them replaced with less reliable tenants.