AST and Fixed Terms - in their Current Form!

We often get calls from landlords who are not sure if they need to issue a new tenancy agreement once their fixed term ends.

RRB changes will impact how fixed terms will operate

So before we see the implementation of the RRB, what happens currently when your Assured Shorthold Tenancy (AST) comes to the end of its fixed term? 

One of three things typically happens:

It becomes a periodic tenancy automatically (rolling contract)

If neither party ends the tenancy at the end of the fixed term, the tenancy will usually continue as a "periodic tenancy". This means:

• You don’t have to sign anything new.

• The tenancy continues under the same terms.

• It "rolls over" either monthly or weekly, depending on how often rent is paid.

  
  

You can arrange to sign a new fixed-term agreement

You can currently offer a new fixed-term AST entering a new legally binding agreement with:

• Possibly new terms (e.g potentially include a rent increase).

• A new end date and commitment.

  
  

The tenancy ends completely

If either party serves notice to end the tenancy at the end of the fixed term, then:

• The tenant naturally will have to leave as required by the end date.

• The tenant can leave on the last day of fixed term with no notice!

Very important to note however is the impact of the Renters’ Rights Bill on Assured Shorthold Tenancies.  AST’s in England as we know them wont exist!  All fixed terms will no longer be legal and period tenancies will take their place.

What will happen to fixed-term tenancies after the RRB?

New fixed-term tenancies will no longer be allowed

• From the date the RRB is implemented, all new tenancies must be periodic (rolling contracts).

• You will not be able to sign a new fixed-term AST—the law will prohibit them.

  
  

Existing fixed-term tenancies will continue — until implementation of the Renters’ Rights Bill

• Once the fixed term ends, your tenancy will automatically convert to a rolling (periodic) tenancy.

  
  

Once converted, it stays periodic

• The tenancy will continue indefinitely unless the tenant ends it with notice or the landlord regains possession through specific legal grounds (no more "no-fault" Section 21).

• You cannot renew into a new fixed term after conversion.

Summary of Key Effects

What Landlords Should Know

Landlords will no longer be able to rely on fixed-term lengths to plan tenancies. You must use legal grounds if you want to reclaim the property using a Section 8 notice due to selling the property, moving in to it, tackling serious rent arrears or anti-social behaviour etc.  Your tenant however will have more flexibility wont be locked into any lengthy fixed term and will be able to leave at any time with just 2 months’ notice.   The feeling is amongst the profession that this will still be unlikely, although plausible, as there is a lot of expense, time and effort which goes into seeking a property and securing it… but we will have to wait and see.

Are Any Fixed-Term Tenancies Still Allowed?

Yes, some exceptions will apply:

• Student tenancies may be exempt, allowing fixed terms for academic cycles (although we are waiting for final bill amendments).

• Company lets and high-rent properties (£100,000 plus per year) aren't governed by the standard AST rules and remain unaffected.