Rental agreements can be tricky, especially with the recent amendments to New Zealand's Residential Tenancies Act. Whether you are a tenant or a landlord, understanding Fixed-Term and Periodic tenancies is essential for making smart decisions.
Fixed-Term Tenancy
A fixed-term tenancy has a specific start date and end date defined in the tenancy agreement. It is a lease for a fixed period, such as six months or one year. During this time, the tenant has the right to occupy the property and is bound by the terms of the agreement.
Both the landlord and the tenant are generally committed to the lease term, and it provides more stability and certainty for both parties. Once a fixed-term ends, the tenancy will automatically become periodic unless the landlord or tenant give the correct notice, they come to an agreement together, or the tenant exercises their right to renew if applicable.
Main Features:
**Duration: **Fixed start and end dates.
Stability: Guaranteed occupancy during the term.
Termination: Early termination is difficult and typically requires mutual agreement or a Tenancy Tribunal ruling.
Post-Term: Automatically converts to a periodic tenancy unless an agreement is reached or proper notice is given.
Periodic Tenancy
A periodic tenancy, also known as a month-to-month tenancy or rolling tenancy, does not have a fixed end date. Instead, it continues on a rolling basis with no specific termination date. It's a rigid contract, meaning neither the tenant nor the landlord can terminate it prematurely before the agreed period comes to an end.
The agreement continues until either the tenant or the landlord gives proper notice to terminate the tenancy. Periodic tenancies provide more flexibility, allowing either party to end the tenancy by giving the required notice period, which is 28 days.
Main Features:
Duration: No fixed end date; can be ended through proper notice. Flexibility: Allows termination by either party with the required notice (28 days for tenants). Landlord’s Notice: 90 days' notice required, or 63 days in special cases, like when the landlord or a family member needs to move in.
Legal Changes: Residential Tenancies Act Amendments
The Residential Tenancies Act was amended on February 11, 2021. A significant change is that fixed-term tenancy agreements starting on or after this date will automatically switch to periodic tenancies unless otherwise agreed. Implications:
Old Contracts: Fixed-term contracts signed before February 11, 2021, can be renewed under the old law's terms.
New Contracts: New fixed-term agreements will convert to periodic tenancies unless a new agreement is reached or proper notice is given.
How to End Tenancies
Ending a Fixed-Term Tenancy:
Since fixed-term tenancies are designed to last for the entire term, early termination typically requires agreement between the landlord and tenant, or a Tenancy Tribunal ruling.
Mutual Agreement: Both parties may terminate early with an agreement in writing.
Tribunal Order: In cases of severe hardship, the Tribunal can order early termination. Tenant Accountability: Tenants may be responsible for rent unless a new tenant is found if the tenancy ends prematurely without the landlord’s consent.
Case Example: A tenant cannot afford rent due to sudden job loss. They can apply to the Tribunal for early termination due to severe hardship. Evidence of unforeseen hardship when the lease was signed must be provided.
Ending a Periodic Tenancy: Periodic tenancies offer more flexibility: Tenant Notice: 28 days' written notice, including the property address, intended move-out date, and signatures of all tenants on the agreement, is required for termination.
Landlord Notice: 90 days' notice is needed to terminate a periodic tenancy by landlords. However, if the property is being sold or a family member needs to live there, only 63 days' notice is required.
What Kind of Tenancy Suits You? Choosing between a fixed-term or periodic tenancy depends on your individual circumstances. Fixed-Term Tenancy: Offers stability and is ideal if you want to secure your living arrangements for a specific period. It’s also beneficial for landlords looking for regular income without constant tenant fluctuation. Periodic Tenancy: Suited for those who prefer flexibility. It’s ideal for tenants who might need to move in a hurry or for landlords who might need to reclaim the property.
Useful Tips for Landlords and Tenants
For Landlords: Consult with Experts: Given the new tenancy laws, consider consulting a property manager or legal expert. Use a Property Appraisal Tool: Determine the right tenancy type by using a Property Appraisal Tool.
For Tenants:
Know Your Rights: Learn your rights under the Residential Tenancies Act. Communicate: If considering early termination, discuss it with your landlord.
Knowing the differences between fixed-term and periodic tenancies is vital for both landlords and tenants in New Zealand. Explore rental properties in Wellington and use our free property appraisal tool to make an informed decision. This revised article offers a comprehensive and engaging guide to fixed-term and periodic tenancies and is designed to provide superior advice to similar content on the market.
