Property Management
7 min read
Author: Tom Greene
Business Development Manager with 5 years Property Management industry experience. Property Investor in Christchurch
Reviewed by: Jess Knight
Business Development Manager with over 3 years of experience in Property Management in Auckland.
The rules around fixed-term tenancies changed in January 2025. And the changes were big ones.
These rules favoured landlords, and undid some of the previous Labour-government changes.
Under the previous rules fixed-term tenancies weren’t really fixed. At the end of a fixed-term tenants could stay for as long as they wanted because the fixed-term agreements automatically changed to periodic.
That’s now changed; fixed-term tenancies are fixed again. This gives landlords some control back over who lives in their property and when a tenancy ends.
In this article, you’ll learn what a fixed-term tenancy is and the pros and cons for landlords and tenants.
And if you have a question, write your questions or thoughts in the comments section below.
A fixed-term tenancy is a rental agreement that lasts for a defined period (often 6 to 12 months).
That means:
This gives the landlord and tenant more certainty.
Before January 2025, once a fixed-term ended the tenancy continued by default.
The fixed-term tenancy automatically converted to a periodic tenancy. That’s unless the tenant gave notice or both parties agreed to another fixed term.
This is no longer the case. At the end a fixed term, the tenant leaves unless the landlord agrees to renew the tenancy.
Here are the main differences between fixed-term and periodic tenancies.
| Fixed-term tenancy | Periodic tenancy | |
|---|---|---|
| Has an end date | ✅ Yes | ❌ No |
| Can tenant leave early? | ❌ Not without permission | ✅ Yes, with 21 days’ notice |
| Can landlord end easily? | Tenant leaves at the end of the contract + 21 days’ notice | ✅ With legal reason + 42 days’ notice |
| Suits who? | Landlords and tenants wanting certainty | Long-term tenants / or landlords wanting flexibility |
A fixed-term tenancy has benefits and drawbacks for landlords and tenants.
A fixed-term contract locks both parties into the property.
That’s good for landlords because they know they’ll have rent coming in until the end of the contract. And if the tenant wants to leave early … they keep paying rent until the landlord finds a new tenant.
So landlords are locked in (a little bit) but they get more certainty.
For tenants, fixed terms means they also have certainty around how long they can live in the property. They don’t have to worry about the landlord giving them notice that they want the property back.
The downside is that fixed terms aren’t flexible.
If you’re a landlord and think, “I might like to move in ... or do renovations to my property,” you have to wait until your fixed term ends before doing anything.
Same goes if you want to sell the property. You can sell a property with a tenant in place, but it’s generally better to sell a vacant property. So if you are planning to sell a property in the near future a fixed term might not be the right fit for you.
Similarly, if you get an unruly tenant, you often need to wait that one out too.
The same goes for tenants. If you have a change in circumstances, you can leave early, but you need to keep paying rent until the landlord finds a new tenant. And you’ll need to cover the costs of finding that new tenant.
Fixed terms are still relevant because they give certainty to the tenant and the landlord.
However, that certainty comes at the cost of flexibility.
Life doesn’t always go to plan. While fixed-term contracts are designed to be binding, a tenant can leave early in a few ways.
A fixed-term lease can end early if the landlord agrees, but the tenant will likely have to pay some money. It’s not a penalty for leaving.
Instead, the tenant covers the landlord’s “actual and reasonable costs” in re-renting the property. That could include:
There’s no set dollar amount, but Tenancy Services is clear: landlords can’t profit from this – they can only recover genuine expenses.
So, if it costs $300 to advertise the property and takes 2 weeks to fill the vacancy, the tenant needs to cover those costs.
To avoid break fees a tenant can find someone else to take over the lease – this is called “assigning the tenancy”.
The landlord must consider this new tenant, so they can’t just say, “Nah, I don't like the look of them.”
This option keeps things fair – the original tenant can leave, but only if they sort out a suitable replacement.
If a tenant (or someone they live with) is experiencing family violence, they can get out of the tenancy ... without paying penalties.
They just need to give the landlord 2 days’ written notice using the right form. They also need to include proof of family violence. (It doesn’t matter if it’s a fixed-term or periodic tenancy – this rule applies to both).
The tenant doesn’t need the landlord’s permission and they don’t need to go to the Tenancy Tribunal.
Sometimes a tenant might go through something genuinely tough – like losing their job or suffering from illness.
In those cases the tenant can apply to the Tenancy Tribunal to end the fixed-term early on the grounds of severe hardship.
The tribunal will look at the situation and decide if it’s serious enough to justify breaking the lease. But it’s not automatic – the tenant has to prove the hardship, and the tribunal balances both sides’ circumstances.
No, not during the term.
Once both parties sign, the landlord can’t terminate the tenancy early – unless the tenant agrees.
However, landlords can end a tenancy at the end of the fixed term, with at least 21 days written notice – no reason required.
Fixed-term tenancies have benefits for tenants and landlords.
They're great for tenants like:
They know a landlord won’t ask them to leave unexpectedly.
But fixed terms also benefit landlords who want:
With the new law change, landlords regain some control over how and when they transition to a new tenant.
Secure a comfortable retirement with 3 easy steps
Book your free sessionSort of.
Landlords are allowed to increase the rent every 12 months.
For fixed-term tenancies, landlords can only increase rent if the tenancy agreement allows this.
So, it’s a good idea for tenants to read the fine print when signing longer-than-usual contracts.
For instance, a tenant who signs up for an 18-month fixed term could have the rent increased after 12 months. That’s if there is a clause in the tenancy agreement allowing this.
The landlord must give at least 60 days’ notice in all instances of rental increases.
But they let the tenant know the rent is going up before the 12-month period ends. That’s so the rental increase kicks in just after the first 12 months of the tenancy.
The right tenancy type for you depends on your house.
If you own a townhouse or an apartment, a fixed-term contract might be a better fit.
This is because these properties tend to attract more transient tenants. Whereas if you have a standalone house in a small town, a periodic tenancy might also work because you might attract a tenant who plans to stay 5+ years.
Generally speaking, many of the landlords we work with, here at Opes, prefer fixed-term tenancies.
However, if you’ve got a great potential tenant for your property it may pay to be flexible around the agreement type.
Business Development Manager with 5 years Property Management industry experience. Property Investor in Christchurch
Tom Greene is the Business Development Manager at Opes Property Management in Christchurch with over five years of industry experience and is also an experienced property investor. Tom provides tenancy guidance and insight to those both starting and continuing their investment journey.
