Periodic tenancies are those that have expired, but without the landlord or tenant forcing the other party’s hand. As such, periodics continue on rolling monthly contracts, and are therefore perpetually in their last month.
In some rare cases, for example when a tenant has been in situ for a very long time and knows the landlord well, this can work.
However, most periodic tenancies are actually ones that neither party benefits from. Neither party has security, neither can trust the other, nor does it do anything for the tenant/landlord relationship, which stagnates with each passing month.
Let’s look at what it’s like to be a landlord in this situation. It’s November 2015 and you are missing out on your right to deduct mortgage interest from your rental income. What doesn’t help is the fact that your mortgage interest is about to rise (if you haven’t remortgaged, now is the time!). You’ve told your agent, twice now, to “just leave it running month by month” so the rent is the same as it was two years ago. Just how much could this relaxed approach be costing you, now and in the months to come?
Furthermore, your tenants are worried. They have not been contacted by you to renew their tenancy and are therefore concerned you will evict them. They makes the first move – they will move in with their parents over Christmas and New Year, and start looking for a new place in January.
They move out. You’ve lost your rent, you’re looking at a void period for at least a month, and your mortgage still needs to be paid (not to mention Christmas shopping).
It’s a worst case scenario but it’s entirely plausible. The best way forward is to pre-empt these issues and sign your tenant up to a fixed rate renewal, at least until the end of March 2016. Both parties benefit from security, both can budget accordingly, and Christmas isn’t cancelled.
Periodic tenancies require less work, but don’t secure your immediate future. Business naturally slows near the end of the year, but that doesn’t mean you should run the risk of it stopping altogether.
If you have any periodic tenancies, please contact your agent today to discuss renewing the tenancy into the New Year.