Quick Guide To Fixed And Periodic Tenancies For Landlords

November 25, 2024

The difference between fixed and periodic tenancy is simple: fixed-term runs for a set period (like 12 months), while periodic continues until either you or your tenant give notice.

Landlords have to consider the pros and cons of each to decide which agreement to use. Every property and situation is unique, which is why expert guidance matters.

At Harper Properties, we have over 40 years of combined experience in Auckland Property Management.

We take a people-first approach, and focus on creating win-win scenarios – which means you get reliable income and quality tenants.

In this article:

Types of Residential Tenancy Agreements in NZ

There are two types of residential tenancy agreements – fixed and periodic.

Remember, your fixed-term tenancy will automatically become periodic over time – so it pays to brush up on both options.

Here’s what you need to know…

Fixed-term tenancy agreements

Fixed-term tenancies give tenants a set rental period – whether that’s six months, one year, or longer – with a clear end date specified in the agreement.

For you as a landlord, this means guaranteed rental income for the entire term, as neither party can end the tenancy early without mutual agreement.

From our experience managing properties across Auckland, fixed-term agreements work best when you’re confident about your long-term plans.

They offer stability for both parties – you get reliable income and both you and your tenants have clear rights and responsibilities throughout the term.

Many people prefer fixed-term tenancy because they can’t be asked to leave (except in very specific circumstances).

We usually offer fixed-term options after thorough background checks or when an initial tenancy is running smoothly.

Before committing, it’s worth ensuring you’re happy with the tenant, the rent level, and your long-term plans for the property.

Periodic tenancy agreements

Periodic tenancies offer more flexibility, continuing indefinitely until you or the tenant give notice.

To end a periodic tenancy, landlords need to provide 90 days’ notice in most cases to end a periodic tenancy – or 63 days’ notice in specific circumstances (like selling or family moving in). Tenants need to give 28 days’ notice to end the tenancy.

For fixed-term tenancies that are converting to periodic, if you don’t want this to happen, you’ll need to give notice and provide a valid reason (if the tenancy started after February 11, 2021).

Your tenant would need to give 28 days’ notice before the end of the fixed-term if they don’t want it to become periodic.

Periodic tenancies can be useful for new landlord-tenant relationships or when you’re considering plans for the property including:

Renovations
Selling, or
Moving back in

Some tenants appreciate the flexibility that a periodic tenancy offers because they can move with shorter notice if their situation changes.

Pros and cons of fixed-term and periodic tenancies

	Fixed-Term	Periodic
Pros	Guaranteed rental income for a set period Protected from market downturns Lower vacancy risk Clear timeline for planning Can’t be ended early without agreement	Flexibility to make changes No renewal paperwork needed Can sell with vacant possession Shorter commitment
Cons	Can’t end early if circumstances change Locked into the current rent rate Must wait until term ends to sell vacant Need to handle renewals/extensions	Less income security Tenants can leave with 28 days’ notice Higher turnover potential More frequent vacancy risk May need more active management
Best for:	Long-term investment plans Properties you won’t sell soon When you’re happy with current tenants Stable rental markets	Testing new tenant relationships Properties you might sell Areas with rising rents When flexibility matters more than stability

How To Decide Which Tenancy To Use

At the end of the day, your tenancy agreement should reflect your property investment strategy and personal circumstances.

We’ve found that successful tenancies depend more on finding the right fit than following a one-size-fits-all approach.

Our thorough tenant screening process – including in-person interviews and detailed background checks – helps ensure that everything runs smoothly, no matter which tenancy type you opt for. (This is one of the things you should always ask a property manager about!)

But if you want a few more tips to help you make up your mind, here are the key factors we recommend considering:

Consider your plans with the property

One of the most common questions from property owners is about timing and flexibility.

Having a property manager can make these decisions easier, as the type of tenancy you choose needs to match your plans for the property – both short and long-term.

Choose periodic if you might want to sell, renovate, or move back in within the next year
Opt for fixed-term tenancy if you’re committed to long-term investing and happy with your current arrangement
Consider periodic for properties you might want to develop or significantly upgrade

Evaluate the local rental market

Understanding your local market is key when choosing between tenancy types. Every Auckland suburb is unique, each with its own rental patterns and growth rates.

If rents are rising quickly in your area, periodic tenancies let you adjust rates more easily
Fixed-term tenancy works well in stable markets where you’re satisfied with current returns
Consider your area’s seasonal rental patterns – fixed-term can help you align end dates with peak rental periods

Is this the first time renting your property?

New landlords often ask us ‘What is a periodic tenancy, and is it right for me?’ We usually offer fixed terms. Our thorough background checks help us ensure that tenants are a great fit for the property, giving you peace of mind and guaranteed income.

Trust Harper Properties For Expert Handling Of Tenancies

Whatever tenancy type suits your property, successful letting comes down to finding great tenants and managing relationships professionally.

As experienced Auckland property managers with over 40 years of combined experience across Auckland, zero letting fees, and our comprehensive property management service at just 8.5%, we’ll help you make the right choice for your investment.

Book a free rental appraisal today!

Your Tenancy Questions Answered

Do landlords prefer fixed or periodic?

Most landlords prefer fixed-term tenancies for guaranteed income and stability, though experienced property investors often maintain a mix of both depending on their portfolio strategy and market conditions.

Can a landlord end a fixed-term tenancy?

A fixed-term tenancy can only be ended before its expiry date if both parties agree in writing, or through a Tenancy Tribunal order in specific circumstances (such as a serious tenant breach of the agreement).

What are the disadvantages of periodic tenancies?

Reduced income security is the big one. Tenants can give 28 days’ notice to leave at any time, so you could end up with unexpected vacancies and income gaps when you least expect it.