Fixed Term vs Periodic Tenancy - What It Means and the Pros and Cons

One of the most common questions rental providers ask at lease renewal time is:
Should we lock in another fixed term or allow the tenancy to roll over to periodic?

The answer isn’t always straightforward. Both fixed term leases and periodic (month-to-month) tenancies have advantages and risks. The right choice depends on your goals, market conditions, and long-term plans for the property.

Here’s what you need to know.

What is a Fixed Term Lease?

A fixed term lease runs for a set period, typically 12 months, sometimes longer. The agreement has a clear start date and end date.

During this period:

• Rent and terms are locked in (subject to legal rent review rules)

• The tenant is committed to staying for the agreed duration

• The rental provider cannot end the tenancy without lawful grounds

At the end of the fixed term, the agreement either:

• Renews for another fixed term, or

• Rolls over into a periodic tenancy if no new agreement is signed

What is a Periodic Tenancy?

A periodic tenancy (often called month-to-month) continues without a fixed end date.

It operates under the same Residential Tenancies legislation but:

• There is no set expiry date

• Either party can end the agreement with the required notice

• Flexibility increases for both sides

Periodic tenancies often occur when a fixed lease expires and neither party signs a new agreement.

The Pros and Cons for Rental Providers

Fixed Term Lease – The Pros

Income Certainty - A fixed term provides predictability. You know the tenant is committed for the agreed period, which reduces short-term vacancy risk.

Stability - Longer fixed terms (e.g. 12 months) can create tenancy stability and reduce turnover costs such as advertising and re-letting fees.

Planning Confidence - If you don’t intend to sell or renovate soon, a fixed term gives structure and certainty. Even though renters have increased rights in breaking fixed term agreements, we believe that they provide a "physiological" commitment to the property which shouldn't be underestimated.

Fixed Term Lease – The Cons 
Reduced Flexibility - If your circumstances change (for example, you decide to sell), ending a fixed term early can be difficult unless legal grounds apply. 

Periodic Tenancy – The Pros 
Flexibility - Periodic tenancies provide greater flexibility if you are considering Selling the property, Moving back in and Major renovations 

You are not locked into a long-term agreement. 

Tenant Satisfaction - Some tenants value flexibility and may stay longer simply because they aren’t locked into a new fixed commitment. 

Periodic Tenancy – The Cons

Less Predictability - Tenants can give notice and leave at any time (within legal notice requirements), which may increase vacancy risk. 

Planning Uncertainty - Without a fixed end date, timing turnover for peak leasing seasons can be harder.