The Residential Tenancies Amendment Act 2020 has implemented significant changes relating to fixed-term and periodic tenancies.
We’ve covered these changes from the perspective of both landlords and tenants in previous articles. In this article, we’ll summarise the new rules in relation to the termination of each type of tenancy.
What’s the difference between a periodic and fixed-term tenancy?
A periodic tenancy doesn’t have a fixed end date. The tenancy will continue until either the landlord or tenant decides to end it.
A fixed-term tenancy has a defined end date. When the tenancy agreement is signed by the landlord and tenant, both parties agree that the tenancy will last for a fixed duration (for example, 3 months, 6 months, 12 months or 24 months).
It is really important to ensure you are aware of the end date of your fixed-term tenancy and that you give notice in accordance with the Residential Tenancies Act. If you don’t give notice, the fixed-term tenancy will convert into a periodic tenancy, which has stricter requirements for termination under the new rules.
Ending a periodic tenancy
Under the old laws, landlords were entitled to terminate a periodic tenancy without cause. However, as of 11 February 2021, landlords are required to provide a valid reason for ending a periodic tenancy.
A landlord can validly terminate a periodic tenancy by giving at least 63 days’ notice if:
- The owner requires the property for themselves or a member of their family to live in. They will need to move into the property within 90 days after the termination date and use it as their primary place of residence for at least 90 days.
- The landlord currently uses the property, or has acquired the property, for occupation by their employees (or contractors under contracts for services).
- The landlord currently uses the property, or has acquired the property, for occupation by employees or contractors of a school board of trustees.
A landlord can validly terminate a periodic tenancy by giving at least 90 days’ notice if:
- The property will be put on the market by the owner within 90 days after the termination date.
- The owner is required, under an unconditional agreement for the sale of the property, to give the purchaser vacant possession.
- The landlord is not the owner of the property and their interest in the property is due to end.
- The landlord or owner has acquired the property to facilitate the use of nearby land for a business activity.
- The property will be converted into commercial premises for at least 90 days by the landlord or owner.
- Extensive alterations, refurbishment, repairs or redevelopment of the property will be carried out by the landlord or owner and it would not be practical for the tenant to live in the property while the work is being carried out.
- The property will be demolished within 90 days after the termination date (or material steps towards demolition will be taken within this timeframe).
There are grounds for termination due to non-payment of rent when:
- The rent has been at least five working days late on three separate occasions within a 90-day period.
There are also grounds for termination when:
- The tenant has physically assaulted the landlord, the owner, a member of the landlord’s or owner’s family or the landlord’s agent and a charge has been filed against the tenant in respect of the physical assault.
- Anti-social behaviour where on three separate occasions within a 90-day period the tenant, or a person on the property with their permission, engaged in anti-social behaviour in connection with the tenancy.
- The landlord would suffer greater hardship than the tenant if the tenancy continued and because of that hardship it would be unreasonable to require the landlord to continue with the tenancy.
The amendments have only introduced one change to the obligations of tenants when terminating a periodic tenancy; tenants are now required to provide 28 days’ notice of their intention to end the tenancy, as opposed to the previous 21 days. Notice can be given at any time during the periodic tenancy.
Ending a fixed-term tenancy
To terminate a fixed-term tenancy under the old law, a landlord was simply required to give the tenant notice of their intention to end the tenancy on the expiry of the fixed term.
However, under the new laws, a fixed-term tenancy will automatically convert to a periodic tenancy at the end of the fixed term (i.e. the tenancy will not come to an end) unless:
- The parties agree to extend, renew or terminate the tenancy; or
- The tenant gives 28 days’ notice; or
- The landlord provides a valid reason for termination (any of the reasons outlined above in relation to periodic tenancies).
The most significant difference implemented by the new laws is that landlords can’t decide to end a fixed-term tenancy without the tenant’s agreement unless they have a valid reason for doing so (as set out above).
Meanwhile, a tenant is fully entitled to terminate a fixed-term tenancy on the expiry of the term simply by providing 28 days’ notice.
Conclusion
As you can see, landlords now require strict justification for terminating a fixed-term or periodic tenancy.
In contrast, tenants are entitled to terminate a tenancy by giving 28 days’ notice – no justification required.
If you would like legal advice in relation to tenancy law, feel free to send me an email or give me a call on 09 489 9102.
Note: This post is brief and general in nature. You should not treat it as legal advice and should seek professional advice before taking any action in relation to the matters dealt with in this post. Armstrong Murray accepts no liability for losses suffered by any person or organisation who may rely directly or indirectly on this post.
