Property Management
6 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.
Up until January 2025 it was hard for landlords to ask unruly tenants to leave.
The 6th Labour Government brought in rules that shifted the balance in favour of tenants.
But those changes have now been rolled back, which puts a little more control back in landlords’ hands.
So, what’s the better option now – fixed-term or periodic tenancy?
In this article you’ll learn how periodic tenancies work, and the pros and cons. This way you can make the right call for your investment property.
Got a question or comment about periodic vs fixed-term tenancy? Drop your thoughts in the comments section below.
Before we get into the pros and cons, let’s define the two types of tenancies.
A fixed-term tenancy means a tenant and a landlord are locked in for a certain amount of time – usually 12 months.
The tenant can’t just give notice and leave before the end date without paying money.
A periodic tenancy, on the other hand, is a rolling tenancy with no set end date.
This means either the tenant or the landlord can give notice at any time.
| Fixed-term tenancy | Periodic tenancy | |
|---|---|---|
| Has an end date | ✅ Yes | ❌ No |
| Can the tenant leave early? | ❌ Not without permission | ✅ Yes, with 21 days’ notice |
| Can the 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 |
Tenants must give 21 days’ notice (3 weeks) before leaving; landlords usually need to give 90 days’ notice.
However, landlords can give 42 days’ notice if:
As of January 2025, “no cause” terminations are back.
This means landlords can now ask tenants to move out without giving a reason so long as they provide 90 days’ notice.
Under the previous rules, landlords could only end a tenancy for specific reasons.
In cases of bad behaviour, you had to collect evidence. And you needed 3 examples of anti-social behaviour … all happening within 90 days.
Then, you had to take it to the Tenancy Tribunal.
It was more than a bit of a faff. It was unfair and cumbersome, so,the updated law simplifies things for landlords.
If your tenant is acting in bad faith or causing issues, you don’t need to jump through hoops. Just give them 90 days’ notice and move on.
There were also changes to fixed-term tenancies. Previously a fixed-term tenancy automatically converted to a periodic tenancy.
Now fixed-term tenancies really are fixed again.
Periodic tenancies can be a better fit for long-term tenants, even if some landlords prefer the structure of a fixed term.
Why? Tenants living in a standalone house, with their kids settled in school, may feel better if they don’t have a looming expiry date hanging over their heads.
From a landlord’s perspective, periodic tenancies can work well when you want flexibility down the line. For example, if you think you might want to move into the property, renovate, or sell.
And remember, a periodic tenancy doesn’t stop you from increasing the rent as long as you follow the proper notice periods.
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Rent can be reviewed once every 12 months, starting from the beginning of the tenancy.
You must give at least 60 days’ written notice before the increase takes effect.
This applies to periodic and fixed-term tenancies.
Even if you give early notice, any rent increase can only take effect after the tenancy reaches the 12-month mark.
One risk with periodic tenancies? Some landlords forget to increase the rent on time (especially since you don’t have a renewal date to trigger a review), so it’s worth setting calendar reminders.
Periodic and fixed-term tenancies have upsides and downsides for landlords and tenants. Here are the pros and cons of periodic tenancies.
Tenants often stay longer under periodic agreements because they feel more secure. There’s no looming end date.
This works well for properties that suit long-term renters, like family homes.
Periodic tenancies give landlords more flexibility to make decisions.
For example, to move in, renovate, or sell – without needing to wait for a fixed term to expire.
Same with a tenant. If they get a job offer in another city, or want to move to a bigger place to accommodate a growing family … they don’t have to wait any longer than 3 weeks.
But that flexibility can be a con for landlords.
If tenants give 3 weeks’ notice during a quiet rental period (say, just before Christmas) you could be left with a gap in rent, which means you might need to scramble to fill the property.
Because there’s no annual renewal of your fixed-term lease it’s easy to lose track of when rent increases are due. This will eat into your returns if you miss a few years of renewal.
In the end, the right tenancy type depends on your property and needs.
For instance, if you’ve got a large family home in the suburbs it might be a better option to have them on a periodic tenancy. That way they feel secure in their home without a fixed end date.
Whereas if you own a townhouse or apartment, a fixed-term tenancy might be a better idea. These sorts of properties tend to attract more transient tenants, so a fixed term will give you the security of rent for 12 months.
Generally speaking, many landlords we work with here at Opes prefer fixed-term tenancies.
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.
