When a tenant signs a lease agreement, they sign for a fixed period (e.g. 6 or 12 months).
When the fixed period ends the tenant can stay on for a period with no ending date – a continuing lease - or they can sign a new fixed period.
What is best fixed or continuing lease? There are advantages for both.
A fixed lease secures the tenancy for a certain period giving both landlords and tenants peace of mind (although the lease can be broken in certain circumstances). A fixed lease can also be preferred as the date can be chosen to end in a more favourable season. If there is landlord insurance in place, a fixed lease that is broken by the tenant may sometimes offer more cover than under a continuing lease. And finally, it is a much simpler process for a landlord to end a fixed lease than a continuing lease.
A continuing lease does allow the opportunity to give a rental increase (which cannot be given during a fixed lease unless agreed before commencing). Some tenants do not wish to commit to a new fixed period, and prefer to stay on a continuing lease which they can end at any time.
So it depends on your plans for the property. If you intend to have a lengthy investment, we usually recommend to renew the lease and keep the tenancy on a fixed term lease. However, the tenant does have to agree to enter into a new fixed period.