People often get confused by this and don't understand how fixed term and periodic tenancies work. So here is an explanation.

A periodic tenancy is a tenancy which runs from month to month, or sometimes from week to week. Some run from quarter to quarter or even year to year, but the vast majority run from month to month.

What is the difference between a Periodic tenancy and a fixed term tenancy?

Most people think of a tenancy as only being granted for a specific period of time, typically six months or a year. This is in fact what normally happens to start with - few tenancies, in the private sector anyway, start out by being periodic. In most cases a specific time period is given to the tenant which is set out in the tenancy agreement.

A periodic tenancy is what happens after the fixed term ends.

If the tenancy is an assured shorthold tenancy (which most are) the Housing Act then provides that it will run on, on a month by month or week by week basis, depending on how the rent is paid.

Lets say John Brown has a six month tenancy of 32 Astreet, which runs from 23 January, and that he pays £500 per month. At the end of the fixed term he stays on in the property.

Under the Housing Act (section 5) therefore, he will then have a monthly periodic tenancy. This will start immediately after his old tenancy ended on 22 July and so the 'period' will be from the 23rd day to the 22nd day in the month. Or you could also say that a new period will start on the 23 day of every month.

The rent will be the same and the terms will be the same as the terms and conditions of the preceding fixed term tenancy agreement.

This will generally also happen even if you don't have an AST. If the tenant stays on after the end of the fixed term and pays rent which the landlord accepts, then a periodic tenancy will be implied.

So it is quite wrong when people say that people staying on after the end of the fixed term don't have a tenancy, or even that they are squatters. They are proper tenants with a tenancy agreement.

Statutory periodic tenancies and contractual periodic tenancies

If a tenancy comes into place because on act of Parliament says it will, this will be a 'statutory periodic tenancy'. For example if an AST runs on after the end of the fixed term.

However generally this term is used for Rent Act tenancies where the original 'protected tenancy' is ended by a Notice to Quit but the tenant is entitled to stay on because statute says that a new periodic tenancy will be created. These tenants are generally very difficult to evict (unlike assures shorthold tenants).

A periodic tenancy however will be contractual if it exists because the parties have agreed that it will. Rather than because of a statute.

Are periodic tenancies a good idea?

One reason why many people don't know about periodic tenancies is because letting agents always insist on doing 'renewals'. This is usually because it is something they make a charge for, irrespective of whether it is in anyone's interest to have a further fixed term or not.

A renewal can be a good idea, as it gives both landlord and tenants security for a further period. It is also a good opportunity for the landlord to increase the rent.

However sometimes they are not a good idea. If the tenants plans are uncertain for example, and he thinks he may be posted to Aberdeen for his work, he should not sign a new 12 months fixed term!

Landlords are best advised to allow a tenancy to run on as a periodic tenancy if the tenant is proving problematic, as then if the situation deteriorates they will not have to wait until the end of the fixed term to evict them from the property.

Giving a new fixed term to a tenant you are unhappy with and have considered evicting due to their bad behaviour is NOT recommended.

Creating a periodic tenancy from the beginning

It is also possible to give a tenant a periodic tenancy from the start rather than a fixed term of six months or a year. You do this by giving them an initial term of just one month (or a week, or four weeks) and then just allowing it to run on.

This is not often done in the private sector but is may be a good idea if you want to be flexible. Note however that landlords will not be able to evict tenants under the section 21 ground during the first six months of the tenancy agreement.

Tessa Shepperson

Tessa is a solicitor and author, specialising in residential landlord and tenant law. She runs the popular online service www.landlordlaw.co.uk and writes a respected blog at www.landlordlawblog.co.uk.