What Is A Contractual Periodic Tenancy And How Does It Work?

What Is A Contractual Periodic Tenancy And How Does It Work?

What Is A Contractual Periodic Tenancy And How Does It Work?

What Is A Contractual Periodic Tenancy?

A contractual periodic tenancy is a type of rental agreement where the tenancy runs from month to month, week to week, or another agreed-upon period as specified in the tenancy agreement.  Under a contractual periodic tenancy, both the landlord and tenant agree to this arrangement, ensuring continuity without the need to sign a new agreement.

It is rental agreement that transitions seamlessly into a periodic tenancy after the fixed-term portion expires. Instead of a specific end date, this tenancy runs on a monthly, weekly, or similar basis, as agreed upon in the tenancy contract. The transition to a periodic tenancy is typically outlined in the initial lease agreement, eliminating the need for a new contract.

Advantages of Contractual Periodic Tenancies

  1. Flexibility: Both landlords and tenants enjoy flexibility with contractual periodic tenancies. Tenants can leave with a notice period equal to the length of the rental period, while landlords can terminate the tenancy or suggest a renewal at a later stage, providing both parties with more freedom.
  2. Longer Tenancies: Tenants often feel more secure without a fixed end date, leading to longer stays in periodic tenancies. This can be advantageous for landlords seeking stable, long-term tenants who contribute to a sense of community and stability in the property.
  3. Continuation of Original Contract: With a contractual periodic tenancy, the original contract simply continues after the fixed term ends. This streamlined approach simplifies administrative matters for both landlords and tenants, saving time and effort in drafting new agreements.

Disadvantages of Contractual Periodic Tenancies

  1. Lack of Long-Term Surety: The primary disadvantage for landlords is the potential lack of long-term income surety. Since tenants can leave with relatively short notice, landlords may experience income fluctuations and uncertainty about occupancy.
  2. Risk of Unexpected Vacancies: Good tenants on periodic tenancies can unexpectedly vacate the property, leaving landlords with the task of finding new tenants quickly to avoid vacancies and income loss.
  3. Difficulty in Rent Increases: Landlords may find it challenging to increase rent, especially if they fear losing good tenants. Negotiating rent increases in periodic tenancies can be complex and may require mutual agreement between the parties.

In general, contractual periodic tenancies are a flexible and convenient rental arrangement for both landlords and tenants. They provide advantages such as flexibility, longer tenancies, and the continuation of the original contract.

However, they come with disadvantages like a lack of long-term income surety for landlords and the risk of unexpected vacancies. The termination and renewal processes are straightforward, offering options for both parties to adapt to their changing needs and circumstances.

 

Termination and Renewal of Contractual Periodic Tenancies

Terminating a contractual periodic tenancy can be initiated by either the landlord or the tenant. The termination process for both parties typically involves providing notice.

  1. Tenant Termination: Tenants can end the tenancy at any time they wish, typically with a notice period equal to the length of the rental period, as specified in the lease agreement. This allows tenants the flexibility to move out when it’s convenient for them.
  2. Landlord Termination: Landlords can terminate the tenancy by serving a written notice to the tenant, usually at least 30 days before the next rent due date. This provides landlords with the flexibility to regain possession of the property for various reasons, such as selling the property or making extensive repairs.

Renewal of Contractual Periodic Tenancies:

Renewing a tenancy involves the tenant signing a new tenancy agreement for a new fixed term, providing an opportunity to renegotiate terms and conditions.

However, if the tenant continues to occupy the property after the fixed term expires without signing a renewal agreement, the fixed-term tenancy automatically becomes a periodic tenancy. This offers a seamless transition for tenants who wish to stay without committing to another fixed term.

Difference Between Statutory And Contractual Periodic Tenancies

The main difference between contractual periodic tenancies and statutory periodic tenancies is the notice period required for termination.

In contractual periodic tenancies, the notice period for ending the tenancy may vary depending on the rent payment frequency agreed upon, such as three months if rent is paid quarterly or six months if rent is paid semi-annually.

In contrast, statutory periodic tenancies have a fixed two-month notice period for termination, regardless of the rent payment frequency.

Difference Between Statutory And Contractual Periodic Tenancies

The main differences between statutory and contractual periodic tenancies are:

  • Origin – A statutory periodic tenancy arises automatically by law when a fixed term tenancy ends and the tenant remains in possession. A contractual periodic tenancy is specifically created by the language in the original lease agreement.
  • Notice period – The notice period for a statutory periodic tenancy is defined by law (usually 30 days). The notice period for a contractual periodic tenancy is defined in the original lease (often 30 days or one rental period).
  • Rent changes – In a statutory periodic tenancy, the landlord can change the rent by providing proper notice. In a contractual periodic tenancy, the rent remains the same as the original lease until both parties agree to changes.
  • Lease terms – The terms of a statutory periodic tenancy are based on the expired lease. The terms of a contractual periodic tenancy continue based on the original fixed-term lease.
  • Ending – A statutory periodic tenancy can be ended by either party with proper notice. A contractual periodic tenancy can only be ended for reasons defined in the original lease.
  • Flexibility – Statutory periodic tenancies provide more flexibility for landlords to change terms. Contractual periodic tenancies lock in the original lease terms, unless otherwise agreed.

So in summary, statutory periodic tenancies follow local laws while contractual periodic tenancies continue based on the original fixed-term lease agreement.

Here’s a comparison of statutory and contractual periodic tenancies in a table format:

AspectStatutory Periodic TenancyContractual Periodic Tenancy
FormationArises automatically after the fixed-term lease expires without signing a new agreement.Agreed upon at the outset of the lease with a provision that it will convert to a periodic tenancy after the fixed term.
Control Over TermsGoverned by local tenancy laws and regulations.Terms and conditions are outlined in the original lease agreement, and parties have more control over terms.
Initial Fixed TermExists during the initial fixed term.Begins with an initial fixed-term lease before transitioning into a periodic tenancy.
End DateNo fixed end date; continues indefinitely until terminated.No fixed end date; continues indefinitely until terminated.
Rent IncreasesSubject to local rent control laws and regulations.Rent increases can be negotiated as per the lease agreement.
Notice Period for TerminationTypically requires one rental period’s notice, often one month.Notice period for termination is usually specified in the lease agreement.
RenewalCan be renewed as a new fixed-term lease.Automatically reverts to a periodic tenancy, with the option to renew as a new fixed-term lease if agreed upon.
FlexibilityLimited flexibility due to local regulations.Offers more flexibility in setting terms and conditions.
Administrative SimplicityMay require less administration after the initial lease.Requires less administration as the original lease terms continue.

 

 

 

How To End A Contractual Periodic Tenancy

Ending a contractual periodic tenancy typically involves giving proper notice to terminate the tenancy. The specific requirements for ending a contractual periodic tenancy can vary depending on the terms outlined in the lease agreement and local laws.

Here are the general steps to end a contractual periodic tenancy:

  1. Review the Lease Agreement: Start by reviewing your lease agreement to understand the terms and conditions related to terminating the tenancy. Pay attention to the notice period required for termination and any other specific requirements mentioned in the lease.
  2. Provide Notice to Your Landlord: In most cases, tenants are required to give written notice to their landlord to terminate the tenancy. The notice period and the method of delivering the notice should be in accordance with the terms specified in the lease agreement. Common notice periods are typically one rental period, often one month.
  3. Use the Appropriate Format: Your lease agreement may specify the format and content requirements for the termination notice. Ensure that your notice meets these requirements to be considered valid.
  4. Serve the Notice to Your Landlord: Deliver the termination notice to your landlord using the method specified in the lease agreement or local laws. It is advisable to send the notice via certified mail or another method that provides a record of delivery. Some lease agreements may allow for email communication, but be sure to follow the agreed-upon method.
  5. Follow Up and Document: Keep records of all communication related to the termination notice. This includes copies of the notice, proof of delivery, and any responses from your landlord. These records can be essential if there are any disputes or misunderstandings later on.
  6. Vacate the Property: Ensure you vacate the property by the specified termination date mentioned in your notice. Leave the property in the condition outlined in the lease agreement, taking care of any required cleaning or repairs as necessary.
  7. Return Keys and Request an Inspection: Once you have vacated the property, return the keys to your landlord and request an inspection if it is required as per the lease agreement. This will help ensure any security deposit is handled appropriately.
  8. Settle Outstanding Financial Obligations: Pay any outstanding rent, utilities, or other financial obligations as stipulated in the lease agreement. Ensure that you fulfill all financial commitments before the tenancy officially ends.
  9. Receive Your Security Deposit: After the final inspection (if applicable) and all financial obligations have been met, you should receive your security deposit back, minus any deductions allowed under the lease agreement.

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