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tenancy

Fixed-term vs. Periodic tenancies: What’s the difference?

Key Takeaway

Fixed-term tenancies have a set end date, offering certainty for a specific period. Periodic tenancies, conversely, continue indefinitely until properly terminated by either party with appropriate notice. Different rules apply to ending the tenancy, rent increases, and security of tenure for each type, as outlined in the Residential Tenancies Act 1986.

Navigating residential tenancy agreements in New Zealand involves understanding the two primary types: fixed-term and periodic tenancies. Each type comes with distinct rules, rights, and obligations for both landlords and tenants, primarily governed by the Residential Tenancies Act 1986.

Fixed-Term Tenancies

A fixed-term tenancy is a tenancy agreement that has a specific start and end date [Source: Residential Tenancies Act 1986, s 60(1)(a)]. This type of tenancy offers certainty for both parties regarding the duration of the agreement.

Duration and End

A fixed-term tenancy automatically ends on the date specified in the agreement, unless it is converted to a periodic tenancy or terminated earlier in specific circumstances [Source: Residential Tenancies Act 1986, s 60(1)(a)]. The fixed term can be for any period, but if it is for more than 90 days, special rules apply to its conversion.

Early Termination

Generally, neither the landlord nor the tenant can terminate a fixed-term tenancy early. Exceptions include mutual agreement between the parties, or if a landlord successfully applies to the Tenancy Tribunal due to a significant breach of the tenancy agreement by the tenant [Source: Residential Tenancies Act 1986, s 56, s 56A, s 66]. Tenants may also assign their tenancy (transfer it to another person) with the landlord's consent, which cannot be unreasonably withheld [Source: Residential Tenancies Act 1986, s 42].

Conversion to Periodic Tenancy

If a fixed-term tenancy is for more than 90 days, it will automatically convert to a periodic tenancy at the end of the fixed term unless either the landlord or the tenant gives notice to end the tenancy. This notice must be given between 21 and 90 days before the fixed term ends [Source: Residential Tenancies Act 1986, s 60A(2)]. If proper notice is given, the tenancy ends on the specified date. If the fixed term is 90 days or less, it ends automatically, and there is no automatic conversion unless otherwise agreed.

Rent Increases

Rent cannot be increased during a fixed-term tenancy unless the tenancy agreement specifically allows for it, or the tenant agrees to the increase [Source: Residential Tenancies Act 1986, s 24(1A)].

Periodic Tenancies

A periodic tenancy is a tenancy agreement that continues indefinitely until properly terminated by either the landlord or the tenant [Source: Residential Tenancies Act 1986, s 60]. This type of tenancy provides flexibility for both parties.

Start and Duration

A periodic tenancy can be established from the outset of the agreement or can arise from the conversion of a fixed-term tenancy (as explained above) [Source: Residential Tenancies Act 1986, s 60A(2)]. There is no set end date.

Termination by Tenant

A tenant may terminate a periodic tenancy by giving at least 28 days' written notice to the landlord [Source: Residential Tenancies Act 1986, s 50(1)].

Termination by Landlord

A landlord must give specific notice periods depending on the reason for termination:

  • 90 days' notice must be given if the landlord, or a member of their family, genuinely requires the premises to live in, if the premises are to be sold with vacant possession, or if the premises are to be converted to commercial premises or demolished/extensively renovated [Source: Residential Tenancies Act 1986, s 51(2)].
  • 63 days' notice may be given if the landlord has put the premises on the market for sale within 90 days of the termination date [Source: Residential Tenancies Act 1986, s 51(2)(d)].
  • 21 days' notice can be given if the tenant has engaged in three separate anti-social acts within a 90-day period, and the landlord has given written notice of each act [Source: Residential Tenancies Act 1986, s 51(1A)].
  • For other breaches, such as rent arrears of 21 days or more or other serious breaches, a landlord generally needs to issue a 14-day notice to remedy the breach and then, if not remedied, apply to the Tenancy Tribunal for a termination order [Source: Residential Tenancies Act 1986, s 50(1)(b), s 55].

Rent Increases

Rent in a periodic tenancy can be increased, but no more than once every 12 months, and the landlord must provide at least 60 days' written notice to the tenant [Source: Residential Tenancies Act 1986, s 24(1), s 24(2)].

Key Differences Summarised

Feature Fixed-Term Tenancy Periodic Tenancy
Duration For a specific, agreed-upon period Continues indefinitely until terminated
Certainty High certainty of tenure for the set period Lower certainty, as either party can give notice to terminate
Termination Generally cannot be ended early, except by mutual agreement or significant breach [Source: Residential Tenancies Act 1986, s 60] Can be ended by either party with specific notice periods [Source: Residential Tenancies Act 1986, s 50, s 51]
Rent Increases Generally no rent increases during the term, unless specified in the agreement or with tenant's consent [Source: Residential Tenancies Act 1986, s 24(1A)] Can be increased once every 12 months, with 60 days' notice [Source: Residential Tenancies Act 1986, s 24(1), s 24(2)]
Conversion If over 90 days, may convert to periodic if no notice given to end [Source: Residential Tenancies Act 1986, s 60A(2)] No conversion; continues until terminated

General Rights and Obligations

It is important to note that many general rights and obligations under the Residential Tenancies Act 1986 apply to both fixed-term and periodic tenancies. These include the landlord's responsibility to maintain the premises, the tenant's responsibility to pay rent and keep the property tidy, and the right to quiet enjoyment [Source: Residential Tenancies Act 1986, s 45].

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights and obligations regarding a tenancy agreement, or who are involved in a dispute with a landlord or tenant, should consult with a qualified legal professional. Further assistance can be obtained from official bodies like Tenancy Services or Community Law Centres, which offer free legal advice. Community Law Centres provide free legal help to those who cannot afford private legal services and can be found at https://communitylaw.org.nz/.

Key Resources