Every tenancy has a term, a period of time that it is to last for. These often have a profound effect on the tenancy and how it works. In this article I am going to look at five different terms and see what effect they have.
1. One month
Not many tenancies in the private sector will have a fixed term of one month in their tenancy agreements. However there are very many tenancies which have a one month term, where the tenancy rolls on from month to month – this is known as periodic tenancy.
This is the sort of tenancy you will get if a tenant just goes into a property on a handshake and starts payment rent on a monthly basis. It is also what will happen if a tenant stays on at the end of the fixed term without a new tenancy agreement being signed.
There is nothing wrong or illegal with either of these situations (although it is unwise to allow a tenancy to start with no tenancy agreement being signed). Many tenancies run on for years on a monthly basis.
2. Six months
This is probably the most common fixed term period in private rented sector tenancies. It is a good period to give a new tenant. It gives them a certain amount of security but if they prove to be unsatisfactory, there is not a massive amount of time to wait before you can end it.
3. One year
This is the other main standard tenancy period in the private rented sector. It gives both landlord and tenant a degree of security.
However it is quite a long period of time to commit yourself and so many of these tenancies will include a break clause, to allow either party upon giving a certain amount of written notice (generally one or two months) to end the tenancy early.
4. Over three years
Tenancy agreements are technically a document of title for the transfer of land, and normally these need to be created by deed.
However the Law of Property Act 1925 makes an exception for tenancies created for a fixed term not exceeding three years where the tenant goes into occupation immediately and pays a market rent.
This is why you have a valid binding tenancy if someone just goes in on a handshake and starts paying rent.
However if you want to create a proper binding tenancy for over three years, this has to be done by deed. Which means essentially that the document must say its a deed and the signatures must be witnessed.
5. Seven years
Big changes occur when a tenancy has a fixed term of seven years or more. The first is that that the landlords repairing coveants in the Landlord and Tenant Act 1985 will no longer apply. So the tenant will be responsible for these repairs unless the tenancy agreement states otherwise.
The second changes it that this type of tenancy needs to be registered with the Land Registry.
In reality most short lets have fixed terms of six or twelve months, or are rolling periodic tenancies. Leases with longer fixed terms all tend to be in the order of ninety years and are governed by different legislation than their shorter cousins.