If you’re new to the world of rentals, it’s always wise to start reading up on different terms, and specifically, different contracts that you’ll have to sign when you rent a home or an office for a period of time.
While there is no tenancy that is better than another, there are certain kinds that are more suitable for tenants and landlords, depending on what they may need.
When you sign a tenancy contract, you’re legally binding yourself to a responsibility. No matter how urgent your situation might be in finding a new property to rent, you may need to filter out your options based on the period you plan to stay, and how committed you are in the area of your choice.
The most common form of tenancy is fixed-term, which may be ideal for some, but may not be the best option to others. Here’s what you need to know.
What does fixed-term agreement entail?
Simply put, fixed-term tenancy refers to a contract that legally binds you to a lease for a specified period of time. This obligation applies to both the tenant as well as the landlord. For instance, as a landlord, you are not legally permitted to end the agreement unless the tenant has violated one or more terms in the contract.
And even then, the contract must state that a violation of this preamble leads to eviction. That said, the fixed-term tenancy ends on the date specified in the contract, and the tenant and the landlord may choose to renew the agreement to extend the date or end it. In the event that a tenant chooses to leave before the agreed date, s/he may be obligated to pay for compensation, which is usually the total amount of due rent of the remaining months of the tenancy.
How do I end my fixed-term agreement?
You can’t. Unless a tenant is open to paying a large sum of money as compensation for the landlord, the process would otherwise lead to a lot of due debt and would possibly drop the tenant’s credit score drastically, which would, in turn, affect their ability to rent properties in the future.
However, some individuals may want to test their luck in times of need. In the event that a tenant considers ending the fixed term tenancy, s/he may want to talk to the landlord about “surrendering” the contract. However, this may be very difficult to do, and most landlords turn the request down.
What is a periodic agreement?
A safer alternative for tenants, who may not be entirely sure about the period of time during which they intend to rent a property, is a periodic agreement. This goes especially for those who rent a property close to their place of work, and are unsure about how long they will work for their employer.
It’s best to be honest with your landlord about how long you intend to stay, in order to sign a contract that you can stick to. While it may not be as secure as fixed-term tenancy, a periodic agreement has no end-date and no specified length. The agreement can be altered or ended on a week-to-week, or month-to-month basis, which puts no obligations on either the landlord or the tenant.
One downside to this contract is that the landlord may choose to end the contract when you least expect it. As for landlords who wish to make a stable income, a tenant may also leave whenever they wish, and the arduous process of finding a new tenant will have to be repeated.
How do I make the choice?
As a tenant, the choice entirely depends on both your commitment to the property you’re renting, or whether you can afford to pay for compensation without having it affect your credit score.
On the other hand, landlords who have had bad luck with bad behavior on the parts of previous tenants may want to opt for a contract that is less binding, seeing as evicting a tenant on a fixed-term agreement is nearly impossible unless they default on paying due rent.
For those who are less committed to staying in a property until the specified date, always talk to your landlord about your options and suggest a period agreement. However, if you plan to rent the property on a long-term basis, a fixed-term agreement is much more secure.
Fixed-term tenancies legally bind you to rent a home or office for a fixed period of time, which may be ideal for those committed to long-term stays. If you’re renting a new home to be closer to a new job, or to be in the vicinity of your university, you may want to opt for something more flexible.
This goes especially for individuals who may not be able to afford to pay compensation upon departing earlier than previously agreed-upon with the landlord.