Choosing between a periodic tenancy and fixed term tenancy is one crucial decision that you will have to make as a landlord. Find out if a periodic lease is right for your rental property today.
So How does a Periodic Tenancy Work?
A periodic lease does not have a fixed starting or ending date. Instead your tenancy will be renewed on a weekly, monthly or yearly basis.
Week to week and month to month tenancies are common for residential rental property while year to year tenancy are usually favoured by commercial landlords who need longer term tenants.
What are the Advantages of Having a Periodic Tenancy?
The single best thing of choosing a periodic lease is that you can end it quite quickly and easily. If you have a week to week or month to month tenancy, you can end your lease simply by giving your tenant a written notice to quit 30 to 60 days in advance.
Compare this to a fixed term tenancy where you can remove your tenant only if he agrees to it. Unless he causes trouble and gives you a reason to evict him, you will be stuck with him until the end of the rental period.
In generally it's also easier to raise your rents when you have a periodic lease. All you have to do is to give your tenant a written notice of rent increase 30 to 60 days in advance. They can either choose to accept your new rent or move out.
What are the Disadvantages of a Periodic Tenancy?
Remember the part where you are able to end your tenancy simply by giving your tenant a written notice in advance? Unfortunately this works both ways - Your tenant is also able to end the rental agreement without your consent by passing you a notice to quit 30 to 60 days beforehand.
As a landlord, there is nothing more important than your rental income. If you are not able to find a new tenant in time, then you will be suffering from the highly dreaded loss of rent.
All things being equal, tenants who are looking for periodic lease tend to be more unstable and short term renters. Recent studies reveal that your average periodic renter will only stay for about 6 months in most areas.
When will a Periodic Lease be Right for You?
When you need tenants just for the short run or you are planning to sell your rental property soon, then a periodic lease will probably be right for your needs.
If you happen to be a first time landlord or you want to be extra careful when picking new tenants, then a periodic tenancy can be a powerful tool for screening them.
For example you can request your new tenant to sign a periodic rental agreement for first 3 months. If you are happy with them after this probation period, then you can go ahead and seal the deal with longer fixed term tenancy.
Author Resource:-
Teo Zhenjie has been showing landlords how to manage their tenants and rental properties effectively on Propertydo http://www.propertydo.com/ - To learn more important tips on periodic tenancy, visit his website today for step-by-step real estate guides, free resources and forms.
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