The bill mentions fixed-term tenancies becoming periodic. Do I still need to sign a new contract each year, or does it just roll over? And can I still do rent reviews annually?
Quick Answer
Fixed-term tenancies are being replaced with periodic ones, removing the need for annual contract renewals. Rent reviews remain annual, but must follow new guidelines, not via new agreements.
## Understanding the Shift to Periodic Tenancies
The Renters' Reform Bill, expected in 2025, will abolish fixed-term assured shorthold tenancies (ASTs), converting all into periodic tenancies. This means landlords will no longer need to sign a new contract each year as tenancies will automatically roll over from month to month or week to week after the initial term. This removes the previous incentive for landlords to offer new fixed-term contracts at expiry to 'lock in' a new rent level or security for a further period. The change aligns the private rented sector with social housing and offers tenants greater security by preventing no-fault evictions via Section 21 notices.
## Implications for Annual Contract Signing and Rent Reviews
Under the forthcoming legislation, the practice of signing new annual contracts will largely cease. Instead, the tenancy will automatically become periodic. Landlords can still review rent annually; however, this must be done via a formal rent review clause within the tenancy agreement or by issuing a Section 13 notice, provided it has been at least 12 months since the last rent increase. For a property currently generating £1,200 per month in rent, an annual review could aim for an increase to £1,250, but this would be implemented via notice, not a new contract.
### Can I still do rent reviews annually?
Yes, landlords can still conduct rent reviews annually. The Renters' Reform Bill proposes that rent increases can only occur once every 12 months. Landlords must provide at least two calendar months' notice before implementing a rent increase. Tenants will have the right to challenge any proposed rent increase they deem unfair via the First-tier Tribunal, which will assess market rates. This contrasts with the previous system where a new fixed-term contract might offer a higher rent, which the tenant agreed to by signing. Current BTL stress tests require a 125% rental coverage at 5.5% notional rate, making effective rent reviews critical for cash flow, especially with the Bank of England base rate at 4.75% as of December 2025, pushing BTL mortgage rates to 5.0-6.5%.
### Scenarios for Tenancy and Rent Reviews
* **Scenario 1: Existing Fixed-Term AST:** A tenancy that started before the Bill came into effect will continue as a fixed-term tenancy until that term expires. Once it ends, it will automatically convert to a periodic tenancy. Rent reviews within this period are governed by the existing contract.
* **Scenario 2: New Tenancy Post-Bill:** Any new tenancy agreement entered into after the Bill's enactment will automatically be a periodic tenancy from the outset, with no specific 'fixed term'. Rent reviews will then follow the minimum 12-month interval and two-month notice period. For a two-bedroom flat in Leeds with a market rent of £950, any increase can only be actioned 12 months after the initial rent was set, not tied to a new fixed term.
* **Scenario 3: Implementing Rent Increases:** A landlord wishing to increase rent from £800 to £850 must issue a Section 13 notice, giving two months' notice, after at least 12 months have passed since the previous rent increase. If the tenant believes this is above market value, they can appeal to a tribunal.
## Steve's Rule of Thumb
Assume all tenancies are effectively continuous from day one; structure rent reviews and property management around long-term occupation, not short-term contract cycles.
## What This Means For You
This shift streamlines tenancy management by removing the administrative burden of annual contract renewals but places greater emphasis on transparent, justifiable rent reviews. Most landlords don't lose money because they fail to issue contracts, they lose it by failing at effective property management. Understanding these changes is critical for maintaining profitable landlord profit margins under the new framework. This is exactly what we dissect and strategize inside Property Legacy Education.
Steven's Take
The move to periodic tenancies simplifies administration by eliminating annual re-signing, but it fundamentally alters the dynamic of rent setting. Landlords can no longer use the carrot of a new fixed term to secure a rent increase. Instead, all increases must stand on their own merit against market comparisons, with a robust tribunal appeal route for tenants. This requires a more proactive and evidence-based approach to rent reviews. We must ensure our rental yields are sustainable, especially with BTL rates at 5.0-6.5%.
What You Can Do Next
Review the latest government guidance on the Renters' Reform Bill at gov.uk/government/collections/renters-reform-bill for specific implementation timelines and details when published.
Update your tenancy agreements to reflect the periodic nature of tenancies and incorporate clear, compliant rent review clauses, consulting a specialist property solicitor where necessary (search 'property solicitor' on Law Society website).
Develop a robust system for tracking rent review eligibility (12 months since last increase) and ensure proper two-month notice is given for any proposed increases to avoid disputes and ensure compliance with 'renters' rights and responsibilities'.
Familiarise yourself with local rental market values and how to present evidence for fair rent increases, in case a tenant refers a proposed rent increase to the First-tier Tribunal.
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