Fixed Lease Versus Continuing Lease

Written by: T. Richardson

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.

Fixed Lease Versus Continuing Lease

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.

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