Landlords should beware of the pitfalls of periodic tenancies.
The warning has come from Benham and Reeves Residential Lettings, one of London’s largest independent lettings agents.
It is advising landlords to do their homework when deciding on a tenancy agreement.
According to director Marc von Grundherr, the periodic tenancy, which follows on automatically at the end of an Assured Shorthold Tenancy (AST), is becoming more common as a way of avoiding an agent’s renewal fees.
But he says the implications of this type of agreement can be far-reaching as it allows tenants to vacate a property with just one month’s notice. This could leave landlords with an unwelcome void, especially if notice is given unexpectedly.
“The problem is that many landlords don’t fully understand what a periodic tenancy is,” said Grundherr.
“An AST normally runs for a six or 12-month term, followed by a new agreement for another fixed term. If neither landlord nor tenant signs another agreement, a periodic tenancy automatically follows on with the same terms and conditions.
“The length of the periodic tenancy depends on the rent payment schedule, becoming either a monthly or a weekly periodic tenancy. If the tenant wants to leave, he must give written notice of either four weeks or one month. However, the landlord must give the tenant at least two months’ notice.
“This can cause landlords real difficulties.
“Although a periodic tenancy gives landlords greater flexibility, allowing them to serve a notice to quit more quickly than an AST allows, in reality this flexibility works both ways. If the tenant gives notice, the landlord may be left in the lurch, having to find a new tenant quickly, incurring agents’ expenses and facing a longer void period.
“Sometimes landlords opt for a periodic tenancy to avoid a letting agent’s renewal fees, but this can be a false economy if you take into account lost rental income and the expense of finding a new tenant.
“A fixed term AST, on the other hand, gives the landlord the certainty of a fixed rental income over the period, as well as saving the hassle and expense of finding a new tenant.”
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