The key difference between a periodic and a fixed-term tenancy in New Zealand is the duration and how you end it. A periodic tenancy rolls on week-to-week or month-to-month with no set end date, while a fixed-term tenancy is for a specific period, like 12 months. Ending a periodic tenancy requires notice from either party, whereas a fixed-term tenancy typically ends only on the agreed date unless both parties agree otherwise. Rent increase rules, however, are the same for both.
What is a Periodic Tenancy and a Fixed-Term Tenancy?
A periodic tenancy is an ongoing rental agreement with no fixed end date. It continues indefinitely, usually on a week-to-week or month-to-month basis, until the landlord or tenant gives proper notice to end it. This offers maximum flexibility for both parties.
A fixed-term tenancy is a rental agreement for a specific, agreed period. Common terms are 6, 12, or 24 months. During this fixed term, the tenant is obliged to pay rent and the landlord must provide the property for the entire period, with limited grounds for early termination.
Both tenancy types are governed by the Residential Tenancies Act 1986. The core legal distinction is the commitment period. A Fixed Term Tenancy Agreement provides security of tenure for the set duration. A Periodic Tenancy Agreement provides ongoing tenancy with more flexible exit options.
How to End a Periodic Tenancy: Notice Periods Explained
Ending a periodic tenancy requires giving written notice. The required notice period depends on who is giving it.
Landlord's Notice to End a Periodic Tenancy
A landlord must typically give at least 90 days' notice. Valid reasons for a landlord to end a tenancy include selling the property, needing it for family use, or extensive renovations. The notice must be in writing and state the termination date and reason.
Tenant's Notice to End a Periodic Tenancy
A tenant must give at least 28 days' notice to end a periodic tenancy. The tenant does not need to provide a reason. The notice must be in writing and clearly state the intended termination date.
To formally issue notice, a landlord should use a Landlord's Notice to Terminate Tenancy.
How to End a Fixed-Term Tenancy: Rules and Early Termination
A fixed-term tenancy automatically ends on the end date specified in the agreement. No notice is required from either party if the tenancy is ending as planned.
What Happens at the End of the Fixed Term?
If the tenant stays on and the landlord continues to accept rent, the tenancy automatically converts to a periodic tenancy. To avoid this, either party should communicate their intentions well before the term ends—whether that's renewing for another fixed term or arranging to vacate.
Ending a Fixed-Term Tenancy Early
Ending a fixed-term tenancy before the agreed date is difficult. It generally requires mutual agreement between the landlord and tenant. This agreement should be documented in writing using an Agreement to End Tenancy Early to protect both parties and outline any agreed conditions, like a break fee.
Rent Increase Rules for Both Tenancy Types
The rules for increasing rent are the same for periodic and fixed-term tenancies.
- Notice Period: You must give the tenant at least 60 days' written notice before the increase takes effect.
- Frequency: Rent can only be increased once every 12 months.
The notice must be in writing. It should state the new rent amount and the date it takes effect. Using a formal Notice of Rent Increase helps ensure you include all legally required information.
Key Scenarios: Converting, Changing, and Dealing with Issues
Several common situations arise from the interaction between these tenancy types.
When a Fixed-Term Tenancy Becomes Periodic
If no action is taken at the end of a fixed term and the tenant remains, the tenancy legally becomes periodic. All the rules for periodic tenancies then apply, including the notice periods for ending it.
Changing a Tenancy Type During a Term
You cannot unilaterally change a fixed-term tenancy to a periodic tenancy during the agreed term. Both landlord and tenant must agree to end the fixed-term early and then enter into a new periodic agreement.
Related Processes for Tenancy Management
Other common notices include the Notice of Rent Arrears for overdue rent and the Landlord's Notice to Enter Premises, which requires at least 48 hours' notice for inspections or repairs.
Choosing the Right Tenancy Agreement for Your Situation
Your choice depends on whether you prioritise security or flexibility.
Advantages of a Fixed-Term Tenancy
- Security for Landlords: Guaranteed rental income and a stable tenant for a set period.
- Security for Tenants: A secure home for the term; rent cannot be increased during the fixed period (unless the agreement allows it).
Advantages of a Periodic Tenancy
- Flexibility for Tenants: Ability to give 28 days' notice to leave for any reason.
- Flexibility for Landlords: Ability to end the tenancy with 90 days' notice for specific lawful reasons, or to adjust terms like rent more frequently (subject to the 12-month rule).
Factors to Consider Before Signing
Consider your future plans. If you know you'll need to move in a year, a fixed term provides certainty. If your plans are uncertain, a periodic tenancy offers more freedom. Always ensure any agreement is in writing.
Next Step
To formalise your rental arrangement, you need the correct agreement. For a rental with a specific end date, use a Fixed Term Tenancy Agreement. For an ongoing rental, use a Periodic Tenancy Agreement.
