When it comes to letting properties in NZ, understanding the difference between fixed-term and periodic tenancy agreements is essential. As rental laws evolve and tenant expectations change, having a clear understanding of your obligations can save you time, money, and stress.
Below, we break down the pros and cons of each tenancy type, key legislation dates, and how professional property management can make this process seamless.
What is a Fixed-Term Tenancy?
A fixed-term tenancy is a rental agreement with a defined start and end date, usually lasting 12 months. During this time, neither the landlord nor the tenant can end the agreement early unless both parties agree in writing.
Legal Timeframes to Note:
- Agreements signed on or before 10 February 2021: If renewed each year, and you don’t want to continue the fixed-term, you must give 21 to 90 days’ written notice before the term ends. If no action is taken, it converts to a periodic tenancy, and 28 days’ notice is required to terminate.
- Agreements signed on or after 11 February 2021: You must provide at least 28 days’ notice before the end of the term if you don’t intend to renew. Otherwise, it will also lapse into a periodic agreement.
Benefits of Choosing a Fixed-Term Tenancy
1. Security and certainty
Both parties are locked into a set term, giving tenants long-term housing security and landlords consistent rental income.
2. Less tenant turnover
Fixed-term agreements reduce vacancy rates and the costs associated with marketing and tenant screening.
3. Tenant bears the cost if they break the lease
If a tenant exits early, they are typically responsible for rent payments and reletting costs until a new tenant is found or the term ends.
Things to Consider Before Signing a Fixed-Term Agreement:
- Is the tenant a good long-term fit?
- Does the property comply with Healthy Homes and insulation standards?
- Are there future plans for the property such as sale or major renovations?
- Is the length of the term ideal for both parties?
Pro Tip: Set a reminder 14 weeks before the agreement ends to review your options, communicate with the tenant, and issue any required notices.
What Happens at the End of a Fixed-Term?
Most fixed-term tenancies will automatically convert to periodic tenancies unless a new agreement is signed or notice is given under the Residential Tenancies Act. This change stems from the 2020 amendment that took effect on 11 February 2021.
If the owner plans to move back into the home, they must give 63 days’ notice and live in the property for at least 90 consecutive days.
What is a Periodic Tenancy?
A periodic tenancy is an open-ended rental agreement. It continues until either the landlord or tenant gives legal notice. There is no expiry date, and tenants can end the tenancy with 28 days’ notice at any time.
Advantages of Periodic Tenancies
1. Flexibility
Tenants can move out without long-term commitment, and landlords have the option to regain possession for specific legal reasons, such as:
- Selling the property
- Housing a family member
- Renovating or demolishing
- Using the home for employee accommodation (must be noted in the agreement)
2. No annual renewals
Once the tenancy starts, there’s no need to complete new paperwork every year.
Considerations Before Offering a Periodic Tenancy:
- Higher turnover may mean more frequent vacancies.
- Marketing and reletting costs may increase.
- Tenants could give notice during slow rental periods like the Christmas holidays.
- Landlords are only able to end the tenancy for reasons outlined in the RTA, sometimes requiring Tenancy Tribunal approval.
Ending a Periodic Tenancy: What You Need to Know
Tenants:
Can give 28 days’ notice at any time, without giving a reason.
Landlords:
Can only terminate for specific reasons allowed under the law, such as:
- The property is being sold
- Major renovations or demolition
- Owner or their family member needs to move in (63 days’ notice)
- The home is needed for employee accommodation
- The tenant has breached the agreement (e.g., repeated antisocial behaviour or rent arrears)
Some of these reasons require approval from the Tenancy Tribunal.
How Can a Property Manager Help?
Understanding tenancy laws, timelines, and compliance requirements can be overwhelming, especially if you’re juggling multiple properties. That’s where expert property management comes in.
A qualified property manager can:
- Advise on the best tenancy type for your property
- Handle compliance with Healthy Homes, insulation, and RTA requirements
- Ensure notices and agreements are legally sound
- Minimise tenant turnover and property vacancy
- Represent you at the Tenancy Tribunal if required
Need Expert Help Letting Properties in NZ?
At Reliance Property Management, we specialise in property management across Auckland and the greater NZ region, helping landlords navigate tenancy agreements with confidence.
Whether you’re unsure about converting a tenancy, choosing between fixed or periodic, or just want to maximise your return on investment—we’re here to help.
📞 Call us today on 0800 131 141
📧 Email: info@relianceproperty.co.nz
🌐 Visit: www.reliancepropertymanagement.co.nz