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Are Periodic Tenancies Harmful

Are Periodic Tenancies Harmful?

With the Renters (Reform) Bill yet to pass through Parliament, the future of periodic tenancies is uncertain.

The Renters (Reform) Bill aimed to overhaul the private rented sector for the first time in 30 years, proposing the abolition of fixed-term tenancies (such as 6, 12, or 24-month contracts). However, with the bill not passing before the general election, questions remain about the impact on periodic tenancies.

The bill proposed moving all tenants on Assured Shorthold Tenancies (ASTs) or Assured Tenancies to a unified system of periodic tenancies. However, the announcement of a general election has delayed these changes.

According to a report by Goodlord and the National Residential Landlord Association (NRLA), 47% of letting agents believe periodic tenancies would harm the sector. This policy was considered the most detrimental among the proposed changes, even more than allowing pets in lets and introducing decent home standards.

Fixed-Term vs. Periodic Tenancy Agreements

In England, most private rented sector tenancies are ASTs, which can be fixed-term or periodic:

  • Fixed-term tenancy: Tenants commit to paying rent for a set period, usually six or 12 months. At the end of this period, the tenancy can be renewed, switched to a periodic contract, or terminated.
  • Periodic tenancy: Tenants must give a month’s notice if they wish to leave and are liable for rent until the notice period ends. Landlords can use Section 21 to end the tenancy with two months’ notice.

Current Notice Periods Since the Renters (Reform) Bill hasn’t passed, landlords and agents can still use Section 21 and Section 8 notices to vacate tenants. Notice periods remain at one month or a minimum of 28 days, depending on the agreement.

Government’s Rationale for Periodic Tenancies The government cited the costs of annually renewing tenancies and the inflexible nature of fixed-term ASTs as reasons for proposing periodic tenancies. They aimed to provide tenants with more flexibility to move when needed, avoiding being stuck in unsuitable or unaffordable housing.

Future of Tenancies The Renters (Reform) Bill was in the report stage in the House of Lords before the election announcement. If the Conservative Party wins the election, they will need to reintroduce the bill for it to become law. The Labour Party’s stance on rolling tenancies is unclear, while the Liberal Democrats advocate for longer default tenancies.

Landlords and letting agents should monitor political party manifestos to understand potential impacts on the private housing sector and their business.

The information in this post is valid to the best of our knowledge on the date of posting. It is advised that you seek independent advice based on your individual circumstances.

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