The difference between statutory periodic and contractual periodic tenancies

Most tenancies within the UK will start with a fixed length of either 6 or 12 months. This is known as a fixed term. Once this fixed term ends the tenant can remain in the property, usually until notice is given or the Landlord obtains possession via the court system and a court order. 

To make sure there is always a contract between both tenant and landlord, there are two types of ‘follow on’ contracts they can enter into after the fixed term period. 

Contractual Periodic

Put simply a contractual periodic tenancy will run monthly (or weekly) depending on the previous fixed-term agreement. This is usually a continuation of the tenancy agreement, with the terms for payment stipulated at the beginning of the tenancy. 

This will affect those tenants who have clauses written into their already existing tenancy agreement, which advise what will happen after the fixed term period is over. 

Statutory Periodic 

For those tenants who don’t have these end of fixed period clauses, a statutory tenancy comes into play. 

The Key information here is this will be classed as a brand new tenancy and will be created under Section 5 of the Housing Act 1988. This kind of tenancy will continue to run on the last rent paid (monthly or weekly). If the tenant has been paying five months upfront, this will also defer to monthly payments. 

How does each type of tenancy affect certain laws? 

Knowing what type of tenancy you are under is important for many reasons. Here are some of them. 

Council Tax 

Knowing who’s liable to pay the council tax in certain situations is really important for both tenants and landlords. 

If the property being let is a whole property and there is a fixed term (of at least 6 months) the tenant is the one responsible for paying the council tax until the end of the agreed fixed term. This still applies even if the tenant moves out without giving notice. 

Contractual tenancies follow the same rule until the end of the notice period. 

As statutory periodic tenancies have no fixed term tenants are only responsible to pay the council tax whilst living in the property. After this, the landlord may have to pay the council tax whilst also paying to legally reclaim the property through the court. 

Deposit

If the deposit is correctly entered into the deposit protection scheme the deposit is treated the same between both types of tenancy. However, if the deposit has not been protected correctly there are different penalties for each kind of tenancy. 

For contractual periodic tenancies, the penalty for not protecting the deposit could see landlords paying 1-3 times the deposit amount. 

For the statutory periodic tenancies, the penalty is 2-6 times the deposit amount as it is classed as two separate contracts. 

Increasing the rent in a periodic tenancy

How rent is raised works differently for each type of contract. 

For contractual periodic, you may insert a ‘rent review’ into your tenancy agreement. As long as the clause is a fair term this will be a binding agreement. 

For statutory periodic tenancies, landlords cannot create a ‘rent review’ as the fixed term is a separate contract from the statutory periodic tenancy. Instead, landlords must use the section 13 form and can be served as soon as the fixed period ends. 

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