Fixed-Term Tenancies on the Way Out – What Landlords and Tenants Need to Know.
By Allison Thompson, National Lettings Managing Director, Leaders (part of LRG)
The private rented sector is set for one of its biggest changes in years. The Renters’ Rights Bill, which entered Parliament in September 2024 and is now progressing through the House of Lords, proposes to end fixed-term tenancy agreements for good.
If passed in its current form, the Bill will introduce open-ended tenancy agreements as standard. This would reshape how private rentals work, with big implications for landlords, tenants and agents alike.
The end of fixed terms
The proposed legislation would replace Assured Shorthold Tenancies with periodic agreements. These new tenancies would continue from one rental period to the next until either the tenant or landlord ends them through the proper channels.
Tenants would be able to leave at any point, provided they give two months’ notice. Written contracts would become a legal requirement, and landlords would be limited to collecting no more than one month’s rent in advance.
According to the Government, this change is about flexibility and fairness. It aims to remove the financial burden of being tied into a full-term contract when a property is substandard or when a tenant’s circumstances change unexpectedly.
What this means for landlords
Fixed terms provide certainty. They give landlords the reassurance of rental income for a set period and make financial planning easier. Most landlords currently offer twelve-month contracts, often with a break clause after six months.
Without that structure, there is a risk of increased turnover, more frequent voids, and higher management costs. However, it is also an opportunity. Landlords would gain more flexibility to adjust rents in line with market conditions and regain possession of their property more easily, provided they follow the correct legal process.
It is also important to note that most tenants already stay much longer than the minimum term. According to the English Housing Survey, the average tenancy lasts just over four years. Most tenants want a stable home, not a short stay.
Once the new law is introduced, issuing a fixed-term agreement could lead to a fine of up to £7,000. For landlords, being ready for the change is essential.
What this means for tenants
For tenants, the change brings greater freedom. They will no longer be committed to a full year’s rent if something goes wrong, such as a major issue with the property or the need to relocate for work.
It gives them more control over where they live and for how long. In theory, it could also make renters more confident when entering into a tenancy, knowing they are not locked in if their situation changes.
What about student lets?
Student housing has been one of the more contentious areas of the Renters’ Rights Bill. Initially, the Bill treated student tenancies the same as all others, giving students the right to leave at any point with two months’ notice. However, concerns were quickly raised about the impact this could have on the academic year and on the private student rental market.
In response, one of the few amendments proposed by the House of Lords is to retain fixed-term tenancies for student HMOs. If this amendment is accepted, landlords who let shared houses to students would still be able to offer fixed terms that align with the academic calendar. This provides a degree of certainty for both landlords and students and helps to keep the private student rental market functioning as intended.
Purpose Built Student Accommodation (PBSA) remains unaffected by the Bill and can continue to offer fixed-term contracts as standard.
Further clarification is expected as the Bill progresses, but landlords operating in the student market should begin preparing for different rules depending on the type of property and agreement in place.
Key changes once the legislation comes into force:
• Landlords will no longer be able to require tenants to commit to a fixed term.
• Tenancy contracts will be rolling periodic agreements.
• Tenants will be able to give two months’ notice at any point from the start of the tenancy.
• It will become mandatory to have written terms – currently this is not a legal requirement (although it is highly advisable and best practice).
• At the same time, the maximum rent that can be taken in advance will be limited to one month’s rent.
What happens next?
The Bill is still going through the parliamentary process. If passed, the Government is expected to set a date from which all new tenancies must follow the new rules. Existing fixed-term agreements will likely convert automatically to periodic agreements, with landlords required to inform tenants within a set timeframe.
At Leaders, we are already preparing our landlords for the change. Our teams are reviewing current processes, updating documentation, and providing practical advice to help our clients stay ahead. We believe the move to periodic tenancies can work well for everyone involved when approached with the right strategy.
How landlords can prepare now
While we wait for the final legislation, there are some practical steps landlords can take:
• Review tenancy agreements to ensure they meet current requirements
• Keep properties well maintained to encourage tenants to stay longer
• Use robust referencing to find tenants who are likely to remain long term
• Stay in touch with tenants to understand their future plans
• Set aside reserves to cover any potential increase in void periods
• Keep up to date with local rent levels so you are ready to re-let quickly if needed
By taking action early, landlords can adapt with confidence and continue to run successful rental businesses.
You May Also Enjoy
Buying a Home? What you need to know about asbestos
Hodge Bank introduces 80% LTV on Interest Only Mortgages, helping borrowers maximise their affordability
The end of the ‘Forever Home’? 63 per cent of young homeowners prioritise flexibility and renovation potential over permanence
Ignoring these simple winter property maintenance tasks could cost you big time
Half of first-time buyers delaying until after the Budget