What Happens at the End of a Fixed Term - To Renew or Not To Renew

Fixed term tenancy

In most cases, a tenancy will have been granted by a landlord to a tenant for some fixed term. 

Sometimes this is known as a term certain or initial period, but the Housing Act 1988 refers to it as a fixed term tenancy. 

It used to be the case under section 20 of the Housing Act 1988 that the fixed term had to be for a minimum period of 6 months, and a special prescribed notice was given before any tenancy was granted. Still, this rule was removed for all tenancies granted on or after 28 February 1997.

Since 1997, a fixed term can be granted for any period a landlord and tenant wish to agree. No fixed term needs to be provided, and a periodic tenancy could be given from the outset.

Last day of fixed term

There is no implied right that a tenant may leave anytime during the fixed term. However, the common law is that a fixed term ends on the last day. Therefore, in many cases, it will likely be the case that a tenant can leave within the 24-hour period that is the last day. 

The Office of Fair Trading states that it is impossible to seek notice from a tenant before the last day, but we’re not sure that is entirely correct but has not been tested.

A periodic tenancy will start when a tenant is in occupation at midnight following the last day. What type of periodic tenancy will depend on the tenancy agreement? If there are joint tenants, all the tenants would have to leave on the last day. Otherwise, a periodic tenancy will arise. 

Also, if a notice to quit is given by the tenants expiring on the last day of the term, the notice will have to be from all the tenants.

Statutory periodic tenancy

If the tenancy agreement remains silent on what happens after the fixed term ends and the tenant remains in occupation, a statutory periodic tenancy will arise [section 5 Housing Act 1988].

Similarly, a statutory periodic tenancy would arise if a landlord enforces a break clause during the fixed term. 

A statutory periodic tenancy is a new tenancy granted by the same landlord to the same tenants under the fixed term tenancy.

The new statutory periodic tenancy terms are the same as those contained in the fixed term tenancy (except those relating to rent increases during a statutory periodic tenancy). The periods of the statutory periodic tenancy are the same as the last rent, which was payable under the fixed term tenancy. 

For example, if the last rent payable under a fixed term tenancy were a calendar month from 15th January 2014 to 14th February 2014, the periods of the statutory periodic tenancy would be calendar monthly from 15th of a month to 14th of the following month. 

This periodic tenancy would ‘roll on’ forever until either party gives notice and, if necessary, obtains a court order. 

Before changes were made by the Deregulation Act 2015, it was advised to re-issue prescribed information within 30 days of the new statutory periodic tenancy arising, but this is no longer necessary in most cases. 

No statutory periodic tenancy will arise if the tenant is granted another tenancy for the same dwelling-house, which takes effect immediately at the end of the fixed term tenancy. 

This is often referred to as a ‘renewal’. If a renewal is given sometime after the statutory periodic tenancy has arisen, the periodic tenancy will end, and the new tenancy will start from its commencement date. This means the tenant is in a state of continuous protection by either statute or contract entitling the tenant to remain in occupation.

Contractual periodic tenancy

As discussed earlier, granting an assured shorthold tenancy with no fixed term is possible. This would be a contractual periodic tenancy from the outset and would ‘roll on’ following the rental periods. 

In addition, it’s possible for a fixed-term tenancy to ‘continue’ as a contractual periodic tenancy at the end of the fixed term. 

The resulting periodic tenancy, which continues, would, in essence, be the same as a statutory periodic tenancy in that it would ‘roll on’ for the same periods as the rental periods. However, this could be changed in the tenancy. 

Most landlords would not notice the difference between statutory or contractual periodic tenancy, but legally there are essential differences, and on balance, a contractual periodic tenancy will favour the landlord. 

A statutory periodic tenancy only arises if a fixed term tenancy ‘ends’. If the tenancy ‘continues’, it never ‘ends’, and so the problems that have occurred since Superstrike do not apply, although these have in the central part been fixed by the Deregulation Act 2015. 

That being said, there are still advantages for council tax purposes should a tenant abandon a property during a periodic term. Depending on the local authority policy for council tax, where the tenancy was a statutory periodic tenancy, the landlord would be liable for council tax even when there is a periodic tenancy continuing, and the tenant is not in occupation. However, where the continuation was a contractual periodic tenancy, and the fixed term tenancy never ended, the tenant may remain liable for council tax where insufficient notice has been given, including possible abandonment.

Tenant’s notice

If a tenant wishes to leave during a periodic tenancy, they must give notice. The notice will need to be at least four weeks to a calendar month, depending on the rental period. When served during a periodic tenancy, notice from one of several tenants is sufficient to end the tenancy for them all.

Fixed term renewal

At any time, the landlord and tenant(s) can agree on a new tenancy. Often this is done at the end of the fixed term for another similar fixed term to the previous (for example, six months) and is referred to as a ‘renewal’. 

If a fixed term is granted whilst there is already another in place, for example, if a new tenant is to be added, the old tenancy is automatically surrendered, and the new one takes effect.

Deposit

At the end of the term, there is no need to re-protect or reissue prescribed information as long as it was initially protected correctly and complete prescribed information was given correctly. This applies to a genuine renewal (same tenants, landlord and property) or when the tenancy goes periodic. 

Where the deposit is protected with an insured scheme, you must notify them at the end of the term what is happening, i.e. whether the tenancy has been renewed or gone periodic. 

A fee might be payable where it's been renewed, but where it goes periodic, there usually won't be any fee. 

The scheme should contact you about a month before the end of the term to seek this information. Where the deposit is protected with the custodial scheme, no further action will be required as they hold the deposit.

Which option is best at the end of the fixed term?

There is no easy answer because it all depends on individual circumstances. Still, as a general rule, the Guild recommends noting at the end of the fixed term and allowing a periodic tenancy to take effect.

If you are using Guild tenancy agreements, the tenancy will ‘continue’ as a contractual periodic tenancy, and the periods will be the same as the rental periods. The advantage of a periodic tenancy (whether statutory or contractual) is that either party is free to give notice and bring the tenancy to an end. In our experience, even during a fixed term, if a tenancy wishes to leave, they just will. Yet, despite this, the landlord cannot expire a notice before the end of the fixed term. 

However, we also understand that some landlords and tenants prefer security and being locked into a fixed term. If this is how you like things, then granting a renewal tenancy at the end of each fixed term is a perfectly acceptable method.

Students

There is one exemption to the standard rules, namely students. Student lettings will almost always be permanently on fixed-term tenancies, which are renewed or granted to a new composition of tenants each year. That is normal, and rarely would a student tenancy roll on as a periodic tenancy.