What Tenants Want: Insights on Periodic vs Fixed-Term Tenancies

As the UK government pushes forward with rental reforms, one of the most debated issues for both landlords and tenants is the type of tenancy agreement that works best: fixed-term or periodic. Labour’s Renters’ Rights Bill proposes to make all tenancies periodic by default, giving tenants more flexibility. While this change has been welcomed by some, others—particularly landlords—are cautious about what this will mean for their rental businesses.

In the North West, where demand for rental properties is high, understanding what tenants really want from their rental agreements can help landlords make informed decisions about how to structure their lets. In this article, we explore the pros and cons of both periodic and fixed-term tenancies, and what tenants and landlords in the North West should know about the upcoming changes.

Fixed-Term Tenancies: Stability and Predictability

Traditionally, fixed-term tenancies—typically lasting between 6 to 12 months—have been the standard choice in the UK rental market. Under these agreements, both tenants and landlords commit to a set period, providing stability for both parties.

• Why Tenants Choose Fixed-Term Agreements: Many tenants, especially those with families or those living in cities like Manchester where rent is competitive, prefer the security of knowing their rent won’t increase during the term, and they won’t face the risk of needing to move unexpectedly. For tenants, a fixed-term agreement offers peace of mind, particularly when they are planning to stay in one place for longer.
• Benefits for Landlords: For landlords, fixed-term tenancies provide a level of predictability. You know when your property will be available again, and you can plan for any repairs, upgrades, or rent reviews well in advance. Fixed-term agreements also reduce the administrative burden of frequent tenant changes.

North West Insight: According to the Goodlord State of the Lettings Industry Report, 58.5% of tenants in the North West still prefer fixed-term tenancies. Many see it as a way to lock in stability, particularly in competitive rental markets like Manchester, where properties can be difficult to secure.

Periodic Tenancies: Flexibility for Tenants, Uncertainty for Landlords

Under a periodic tenancy, tenants are not tied to a long-term contract and can end the agreement by giving the required notice—usually one to two months. Labour’s Renters’ Rights Bill aims to make periodic tenancies the default for all renters, offering more flexibility and control over their living arrangements.

• Why Tenants Want Periodic Agreements: Flexibility is the main appeal of periodic tenancies. Tenants in more transient situations—such as students or professionals on short-term work contracts—appreciate being able to move with minimal notice. This can be particularly useful for those who are unsure of their long-term plans or may need to relocate for work or personal reasons.
• Challenges for Landlords: While tenants may appreciate the flexibility, periodic tenancies create more uncertainty for landlords. The prospect of frequent turnover can result in more vacancy periods, increased maintenance, and the added administrative burden of finding new tenants. This is especially true in areas like Manchester, where tenant demand is high, and filling vacant properties quickly is crucial for maintaining cash flow.

North West Insight: Despite the push for periodic tenancies, only 29.7% of tenants in the North West prefer them. Most tenants still value the stability and predictability that fixed-term tenancies offer, even if periodic agreements provide more flexibility.

The Pros and Cons of Both Tenancy Types

Fixed-Term Tenancies

• Pros for Tenants: Security, predictable rent, and protection from sudden eviction during the term.
• Pros for Landlords: Guaranteed rental income for a set period, easier property management, and fewer administrative tasks.
• Cons for Tenants: Less flexibility to move quickly if circumstances change.
• Cons for Landlords: Tenants may be less willing to renew, especially if they’re dissatisfied with the property or if rents in the area have decreased.

Periodic Tenancies

• Pros for Tenants: Flexibility to leave with minimal notice, ideal for those with uncertain or short-term plans.
• Pros for Landlords: Ability to increase rent more frequently and adjust terms more easily if market conditions change.
• Cons for Tenants: Less security, with the potential for rent increases or the need to move at short notice.
• Cons for Landlords: Increased risk of vacancy periods, higher turnover, and more frequent administrative work to manage tenants.

What Tenants Really Want: Striking a Balance

The data shows that while Labour’s reforms favour periodic tenancies, many tenants in the North West still prefer the security of fixed-term agreements. So how can landlords balance the desire for flexibility with the need for stability?

1. Offer Flexibility in Fixed-Term Contracts - One way to meet tenants halfway is to offer flexibility within fixed-term agreements. For example, consider allowing tenants to break the lease early under certain conditions (e.g., job relocation or personal emergencies). This can make your property more appealing without sacrificing the benefits of a fixed-term agreement.
2. Encourage Longer Tenancies with Incentives - Offering incentives, such as rent freezes or slight discounts for tenants who sign longer contracts, can help reduce turnover. Tenants may be more willing to commit to a fixed-term agreement if they feel they are getting added value.
3. Open Communication with Tenants - Understanding your tenants’ needs is key. Whether they prefer stability or flexibility, having clear communication from the start will help you create tenancy agreements that work for both parties. Regular check-ins can help address any concerns early, reducing the likelihood of tenants leaving prematurely.
4. Consider Market Conditions - In competitive rental markets like Manchester, where demand is high, offering flexibility can set your property apart from others. However, if the market slows, having tenants locked into fixed-term agreements may provide more security for your rental income.

The Future of Tenancy Agreements

As Labour’s Renters’ Rights Bill moves forward, landlords need to be prepared for the possibility that periodic tenancies may become the norm. While this may offer more flexibility for tenants, it introduces uncertainty for landlords who rely on predictable rental income and low turnover.

The key to navigating these changes is understanding what tenants in your area want and offering tenancy agreements that provide a balance of flexibility and security. By staying informed and adapting your strategy, you can ensure your properties remain attractive to tenants, regardless of how tenancy laws evolve.

Conclusion: Navigating the Changing Tenancy Landscape

Whether you favuor fixed-term or periodic tenancies, the most important thing is to offer agreements that meet both your needs and the needs of your tenants. In the North West, where demand remains strong, there is still a clear preference for the stability that fixed-term tenancies offer. However, as the Renters’ Rights Bill progresses, landlords will need to adapt to ensure they remain compliant while also meeting tenant expectations.

If you’re unsure about how these changes will affect your rental portfolio or would like advice on structuring your tenancy agreements, get in touch with us today. We’re here to help you navigate the evolving rental landscape with confidence.

Source of Data:

The statistics and insights mentioned in this article are based on findings from Goodlord’s State of the Lettings Industry Report 2024, with a focus on tenancy preferences in the North West.