Fixed term versus periodic tenancies (NSW Landlords)

There are pros and cons for both a fixed term and a periodic agreement.

There are often reasons a landlord may wish to end the tenancy.

For example, they may need to move into the property, move in a family member or relative, prepare to sell it or upgrade it.

Periodic tenancy agreements should be kept at a minimum in your portfolio as the potential loss of income to you as the landlord is heightened.

When renewing each tenancy agreement, work to secure the tenant on a new residential tenancy agreement.

In particular what is crucial is not the date the tenancy agreement begins, but the date it expires.

The cyclical and seasonal nature of tenancies can affect the rent value and its rentability in any given season that is generally tied in with the highs and lows of any given location of the property

What are the Benefits of a fixed term agreement

  • Provides security and peace of mind to the landlord knowing they have a fixed income for the period of the agreement.
  • Enables the landlord to forecast and budget accordingly for any expenses or refurbishment required.
  • Rent increases can be written into tenancy agreements even on 2-3 year fixed term agreements.
  • The term of the agreement can end at a time where the market is at its premium, therefore giving greater control to the landlord and agent.
  • To end a fixed term agreement, a termination notice of 30 days is required to be provided to the tenant. A tenant cannot leave prior to the end of the fixed term but does need to give 14 days notice if they are ending the agreement.
  • Breaking a tenancy agreement becomes the tenant’s issue not the landlords.
  • Landlords insurance policies favour fixed term agreements in rent default.


Disadvantages of a periodic agreement

  • The tenant is in control and can dictate when they wish to end the tenancy.
  • The tenant can leave at any time after receiving an agent issued termination notice and only pay rent until the day they hand in the keys or vacate the premises, whichever is the latter.
  • The option of increasing the rent is often missed as the tenancy continues unless the agency is particular about following through with monitoring all periodic agreements.
  • Tenant may terminate the tenancy at a time in the market that is low season therefore the property will be vacant longer and possible rent value reduction can occur.
  • The landlord/agent has to provide 90 days termination notice if vacant possession is required. Once the tenant receives notice they can move out at any time without further notice.
  • Agent cannot charge for achieving a periodic tenancy unlike a fixed term renewal fee option.
  • Financiers of investment properties, do not like periodic tenancies. Its higher risk to them and more risk means more hurdles to obtain finance in an already tight financial market.
  • Less security for the landlord and less reliable forecast of income versus fixed term tenancies provide.


Consider your objectives for your investment property before deciding which term is best for you.

While a periodic agreement may provide you with more flexibility should you be considering selling or developing the property, a fixed term agreement will provide you with more piece of mind, security and control of your investment.


Communicate with your tenants via the RealRenta platform.

RealRenta dates and time-stamps each interaction between you and your tenant and creates a comprehensive file for each tenancy.


Use RealRenta for Free for up to 2 months now and you will NEVER hand over your investment income to a property manager EVER again.


Marlene Liontis
Thursday, 16 May 2019

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