Fixed-term tenancies

A fixed-term tenancy is one that has an end date.
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What is a fixed-term tenancy?

A fixed-term tenancy is one where the tenancy agreement has either a defined period or a defined start and end date for the tenancy (s 13A(1)(p) RTA).

An example of a clause in a tenancy agreement that shows it’s a fixed-term tenancy is:

“This tenancy is for a fixed-term. The tenancy will start on dd/mm/yyyy and will end on dd/mm/yyyy.”

The fixed term can be for any set period. In areas where there are a lot of students renting, it is quite common for the tenancy to be set for one year. This is often about landlords wanting to ensure their rental properties are occupied and the rent is coming in throughout the whole year, not just during term time.

If the tenancy agreement doesn’t include an end date or there is no written tenancy agreement, then it is likely to be considered a periodic tenancy, even if one of the parties believed otherwise.

Case studies

  Case study

In a text message to the tenant, a landlord said “we don’t want to enter into a legal tenancy because of the toilet issue etc”, but “we will allow you to use the house in exchange for maintenance, at this stage and can we review it in 6 months say, ok?”.

The Tribunal said that there was a legal tenancy and that the Residential Tenancies Act applied. It found that the agreement was not clear enough to be a 6-month fixed-term tenancy, so it was deemed to be periodic.
Tenancy Tribunal Order 4270171

  Case Study

A tenant moved into a property. She felt she had made it clear to the landlord that she needed the property until at least Christmas, so believed she had a secure arrangement for this period. There was no written tenancy agreement.

Part way through this period the landlord gave the tenant 90 days’ notice terminating the tenancy. The landlord disagreed that the tenancy was for a fixed-term and said she understood that the tenant wanted the property for a short (but undefined) period and that she had no intention of entering into a fixed-term tenancy.

The Tribunal found that the tenant had not proven that the tenancy was for a fixed term. By consequence it was considered a periodic tenancy and the landlord’s 90-day notice ending the tenancy was valid.
Tenancy Tribunal Order 4276780, 4276240

 

 

Ordinary and short fixed-term tenancies

There are two types of fixed-term tenancies:

  • An ordinary fixed-term tenancy lasts for longer than 90 days and cannot be terminated early by giving notice (s 2 RTA).
  • A short fixed-term tenancy lasts for 90 days or less. It doesn’t matter whether it is able to be terminated by notice (s 7(3) RTA).

Things to note about fixed-term tenancies

There are a number of features of fixed-term tenancies that it’s good to be aware of:

Fixed-term tenancies are difficult to end early

If a person is deciding whether to enter a fixed-term tenancy or not, it’s important to make sure they understand what the implications are. The agreement is a legal contract and the tenant will be liable to keep paying the rent up until the end date of the tenancy even if they decide they would like to move out. They will need to think about whether they want to live at the property for the entire term and can afford the rent for the whole time frame.

Quick tip

There are only a few situations where a tenant can end a fixed-term tenancy early. For this reason, periodic tenancies are often a better choice for tenants.

Landlords can’t end a fixed term tenancy either, except in limited circumstances

An ordinary fixed-term tenancy becomes a periodic tenancy when it ends
Ordinary fixed-term tenancies automatically become periodic tenancies the day after the tenancy’s end date, unless the landlord and tenant agree otherwise, the tenant gives notice that they want the tenancy to come to an end, or the landlord gives notice using one of the specified reasons (ie, one of the grounds for terminating a periodic tenancy (s 60A RTA).

For more information see Ending a fixed-term tenancy.

No rent increases unless the tenancy agreement says so

Landlords can’t increase the rent for ordinary or short fixed-term tenancies, unless there is a clause in the tenancy agreement that allows them to (s 24(1)(g) RTA).

Even if there is such a clause, the rent can’t be increased sooner than 12 months after the start date, or more than once every 12 months (s 24(1)(d)-(e) RTA). Essentially, at this point the same rules for increasing the rent for a periodic tenancy apply. For more information see Rent increases.

Tenancies for short fixed terms have slightly different rules

A short fixed term tenancy lasts for 90 days or less. The rules for tenancies of a short fixed term are slightly different than an ordinary fixed-term tenancy.

  • A short fixed-term tenancy doesn’t automatically become a periodic tenancy after the end date. The tenancy will end and the tenant has to move out, unless they come to an agreement with the landlord.
  • If a short fixed-term tenancy is extended or renewed beyond 90 days, the rules for periodic tenancies will apply once the initial 90 days has ended (s 7(2) RTA).
  • Landlords can’t offer a short fixed-term tenancy as a trial period, to assess whether the tenant is suitable (s 7(2A) RTA). A clause in a tenancy agreement that says something like “This tenancy is for 90 days, and may be renewed after this at the landlord’s discretion.” will be in breach of this rule. A tenant or former tenant can apply to the Tribunal to have the tenancy extended or renewed (on whatever terms it thinks it fair) if the original tenancy was used as a trial period (s 7(2B) RTA).
  • You can’t go to the Tribunal to ask for a determination of market rent with a short fixed-term tenancy (s 7(1) RTA).

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