Landlords should do their homework when deciding on a tenancy agreement. According to Benham & Reeves Lettings Director Marc von Grundherr, the Periodic Tenancy, which follows on automatically at the end of an Assured Shorthold Tenancy (AST), is becoming more common as it is often seen by some landlords as a way of avoiding an agents renewal fees.

But the implications of this type of agreement can be far-reaching for landlords as it allows tenants to vacate a property with just one months notice, which can leave landlords high and dry without any rental income if the notice is given unexpectedly.

“The problem is that many landlords dont fully understand what a Periodic Tenancy is,” said von Grundeherr. "An AST normally runs for a six or 12 month term, followed by a new agreement for another fixed term. If neither landlord nor tenant signs another agreement, a Periodic Tenancy automatically follows on with the same terms and conditions. The length of the Periodic Tenancy depends on the rent payment schedule, becoming either a monthly or a weekly Periodic Tenancy. If the tenant wants to leave, they must give written notice of either four weeks or one month. However, the landlord must give the tenant at least two months notice."

"This can cause landlords real difficulties, as although a Periodic Tenancy gives landlords greater flexibility, allowing them to serve a notice to quit more quickly than an AST allows, in reality this flexibility also works both ways. If the tenant gives notice, the landlord may be left in the lurch, having to find a new tenant quickly, incurring agents expenses and possibly facing a longer void period."

"Sometimes landlords opt for a Periodic Tenancy to avoid a letting agents renewal fees but this can be a false economy if you take into account lost rental income and the expense of finding a new tenant. A fixed term AST on the other hand gives the landlord the certainty of a fixed rental income over the period, as well as saving the hassle and expense of finding a new tenant.

"The other big issue is rent. Landlords generally want top dollar and expect a healthy increase when the tenancy comes up for renewal. Accepting a fairer but lower increase often persuades a tenant they are better off staying. But what is fair? An experienced lettings agent who knows the local market can offer invaluable advice, helping the landlord to pitch the rent at a level that will persuade the tenant to stay."