When a tenant signs a tenancy agreement, at the moment this is invariably for a period of time. Six months, a year or whatever.
So what happens when this fixed term ends?
The answer is that it depends on
- Whether the tenant is still in occupation, and
- What sort of tenancy it was
If the tenants have moved out
The general rule is that at the end of a fixed term, it ends. This is under a rule known by lawyers as ‘effluxion of time’.
What does that mean? Ending by ‘effluxion of time’ means that the tenancy or lease ends due to the ‘passage of time’ rather than by the occurrence of a specific event.
So, it is part of the definition of a fixed term that it will start on day A and end on day B. It can’t continue any longer, as that was all it was ever created to do.
The significance of this for tenants is that if they have moved out by midnight on the last day of the tenancy, the tenancy will end, and they will have no further liability, e.g. for future rent.
In particular, landlords can’t artificially extend the term by saying that tenants will be responsible for an extra month’s rent (or whatever) if they don’t give notice that they are leaving. Any such term will be void and unenforceable under the Unfair Terms rules in the Consumer Rights Act 2015.
If the tenancy agreement says that (for example) the fixed term will end on 24 June 2024, then that is when it will end.
So, if tenants move out by the end of the fixed term, they will still be liable for rent and other obligations incurred during the fixed term. But they cannot be held liable for anything after that.
If the tenants stay in occupation
In the vast majority of cases, the tenants will have a new ‘periodic’ tenancy which will start immediately after the fixed term ends.
There are two ways this can happen.
Statutory periodic tenancies
For assured and assured shorthold tenancies, the new periodic tenancy will arise because statute, i.e. section 5 of the Housing Act 1988, says it will.
” … the tenant shall be entitled to remain in possession of the dwelling-house let under that tenancy and, …, his right to possession shall depend upon a periodic tenancy arising by virtue of this section.” Housing Act 1988 s5(2).
For ‘common law’ tenancies, e.g., company lets, a new periodic tenancy will be created under section 54(2) of the Law of Property Act 1925 if the tenants pay rent that is accepted by the landlord.
If they don’t pay rent, or if the landlord refuses to accept it (or accepts it on condition that no tenancy is created), then the tenant will be ‘holding over’ and can be evicted through the courts on the basis that they have no right to remain at the property. This situation is quite rare, though.
Contractual periodic tenancies
This is where a periodic tenancy arises, not because of statute, but because the tenancy agreement signed by the tenant says it will.
The advantage of this for the landlord is that they can control the ‘period’ of the tenancy rather than risk it being a long period, such as six months, due to the way the tenant has been paying rent.
It also puts the landlord in a more favourable position as regards council tax, as provided in the case of Leeds City Council v Broadley.
And finally
If the Renters Reform Bill as drafted at the time of writing, comes into force, then fixed terms will go, and all tenancies will be periodic.
This will make lettings a lot more flexible, from the tenant’s point of view, although landlords, particularly student landlords, will be annoyed if tenants decide to move out after just a few weeks. Particularly if they have had to pay their agents a hefty commission to find them.
No doubt, new arrangements will be developed for agents’ commission, although the problem will not arise if landlords are self-managing, for example, with the help of a service such as my Landlord Law service.
We shall have to see if the act as drafted becomes law.