Fixed term or periodic agreements are both popular choices when it comes to leasing or renting out a property. But which one should you choose? In this article, we will discuss the differences between the two and help you decide which agreement is best suited for your needs.
Fixed-Term Agreement
A fixed-term agreement is a lease agreement that has a set start and end date. Once the end date comes, the agreement terminates, and the tenant must either renew the agreement or move out. The lease period is typically six months, one year, or even longer.
Advantages of a Fixed-Term Agreement
One of the main advantages of a fixed-term agreement is that it gives you security as a landlord. You are guaranteed a steady income for the duration of the agreement. It also provides stability for tenants who want to plan their living arrangements and budget accordingly.
Another advantage of a fixed-term agreement is that rent increases are typically only allowed at the end of the lease period. This means that both tenant and landlord can plan accordingly for the next lease period.
Disadvantages of a Fixed-Term Agreement
One of the main disadvantages of a fixed-term agreement is that if the tenant wants to move out before the end of the lease period, they may have to pay a significant amount of money to break the lease. This can be inconvenient for both parties.
Periodic Agreement
A periodic agreement, also known as a rolling or month-to-month agreement, is a lease that automatically renews at the end of each month or rent period. The lease continues until either party gives notice to terminate the agreement.
Advantages of a Periodic Agreement
One of the main advantages of a periodic agreement is that it provides flexibility for both the tenant and the landlord. The tenant can move out with relatively short notice, while the landlord can terminate the agreement if they wish to sell the property or use it for another purpose.
Another advantage of a periodic agreement is that it allows for rent increases to be made more frequently. If the landlord wishes to raise the rent, they can do so with proper notice to the tenant.
Disadvantages of a Periodic Agreement
The main disadvantage of a periodic agreement is that it provides less security for both the tenant and the landlord. The tenant may feel less secure knowing that they could receive notice to vacate at any time, while the landlord may worry about the property being vacant for extended periods.
Conclusion
In conclusion, both fixed-term and periodic agreements have their advantages and disadvantages. As a landlord, you must weigh up the pros and cons of each option and decide which agreement type is best suited for your needs. If you value security and stability, a fixed-term agreement may be the way to go. But if flexibility is more important, a periodic agreement may be the better choice. Regardless of which type of agreement you choose, make sure to clearly outline all terms and conditions to avoid any misunderstandings or disputes.