Periodic vs Fixed-Term Tenancy in NZ: Which One Should You Use?

When you sign a new tenancy agreement in New Zealand, you choose between two types: periodic and fixed-term. The difference has significant consequences for both landlord and tenant - particularly around how and when the tenancy can end. The 2024 amendments to the Residential Tenancies Act changed the rules significantly, and many landlords are still working off outdated assumptions.

What Is a Periodic Tenancy?

A periodic tenancy has no fixed end date. It continues week-to-week (for weekly rent) or fortnight-to-fortnight (fortnightly rent) until one party gives notice to end it.

For landlords, ending a periodic tenancy requires one of the specific grounds in the RTA 2024 amendments. You cannot simply give 90 days notice and end the tenancy for no reason - that was removed in 2021. The permissible grounds include:

• You are selling the property and the sale agreement requires vacant possession
• You or a close family member will move into the property
• The property will be used for something other than residential tenancy
• The property needs extensive renovation that cannot be done with the tenant in place
• The tenant has committed a specified breach (after an issue notice)

For tenants, they can end a periodic tenancy by giving 28 days written notice. No reason required.

What Is a Fixed-Term Tenancy?

A fixed-term tenancy has a specific start and end date - most commonly 6 months or 12 months. Neither party can end it early without the other's agreement (or Tenancy Tribunal involvement), except in specific circumstances such as family violence provisions.

When the fixed term expires, it does not automatically end. Under the current law (post-2021), a fixed-term tenancy converts to a periodic tenancy at the end of the fixed term unless both parties agree to a new fixed-term agreement, or one party gives the required notice to end the tenancy during the final period.

This catches many landlords by surprise. If your fixed-term tenancy expires on 31 December and neither party does anything, the tenancy continues as periodic from 1 January. To prevent this, you need to give 28 days written notice before the end of the fixed term that it will not continue.

Which Is Better for Landlords?

This depends entirely on your situation. There is no universally correct answer.

Fixed-term is useful when:

• You want certainty of income for a defined period
• You are trying to align the tenancy end date with a planned sale or renovation
• You have a student rental and want it to align with the academic year
• You are in a market where vacancies are hard to fill and want to lock in a good tenant

Periodic is useful when:

• You want flexibility to end the tenancy if circumstances change (though the grounds are now limited)
• You have concerns about a new tenant and want a lower-commitment arrangement
• Your property is in a popular area where you can re-let quickly

The honest answer is that periodic tenancies give landlords less flexibility than they used to, since the no-cause termination was removed. Many landlords prefer fixed-term because it at least guarantees rent for the defined period, even if exiting is complicated.

Can You Change a Fixed-Term to Periodic?

Yes, with the tenant's agreement. Both parties need to sign a variation to the tenancy agreement. You cannot unilaterally change a fixed-term to periodic, nor can you shorten a fixed-term without the tenant's consent.

Rent Increases on Fixed-Term vs Periodic

Rent can only be increased once every 12 months, regardless of tenancy type. On a fixed-term tenancy, any rent increase must also be included in the fixed-term agreement itself - you cannot increase rent mid-fixed-term unless the agreement explicitly allows it with 90 days notice. Most fixed-term agreements in NZ include a rent review clause.

On periodic tenancies, you give 90 days written notice of the rent increase. The same once-per-12-months restriction applies.

Ending a Fixed-Term Early

If a tenant wants to leave before the fixed term ends, they technically remain liable for rent until the end of the term. However, you have a duty to mitigate - you must make reasonable efforts to find a new tenant. The departing tenant may cover advertising costs and a letting fee, but you cannot simply charge them the full remaining rent if you could have re-let the property.

If the tenant abandons the property, different rules apply. Document the abandonment carefully and apply to the Tenancy Tribunal promptly.

The Practical Difference in 2024

Before the 2021 amendments, many landlords used fixed-term tenancies specifically because they could end the tenancy at the end of the fixed term without needing a reason. That path is now more complex - while you can give notice to end at the end of the fixed term, the process requires specific grounds in some cases and proper written notice.

The biggest practical change is that landlords now have less control over tenancy endings regardless of type. The best approach is to be selective upfront - good tenant screening reduces the situations where you need to end a tenancy at all.

Tracking Tenancy Dates

Whether you use periodic or fixed-term agreements, you need a reliable way to track rent due dates, rent review dates (for 12-month intervals), and fixed-term end dates. Spreadsheets work but get missed. A proper system sends you alerts before these dates so you are not scrambling at the last minute.

RentManager tracks tenancy start/end dates, calculates the next allowable rent increase date (12 months from the last increase), and stores all your tenancy documents. If you are managing multiple properties, it is the kind of administration that genuinely saves time and prevents costly mistakes like missing the window to give notice.