Fixed-term lease: rules and pitfalls

A fixed-term lease looks simple at first: the agreement runs from date A to date B, and after that the parties are free. But the Rent Act sets strict requirements for when a fixed term is lawful, and the consequences of an invalid fixed term are serious for the landlord. This guide explains the rules.

Note: This guide gives a general overview of the Rent Act's rules. Individual situations can differ. Contact a lawyer if in doubt about your specific tenancy.

What is a fixed-term lease?

A fixed-term lease (also called a fixed-term tenancy) is a lease with a pre-set expiry date. Unlike an open-ended lease, the tenancy ends automatically on the agreed date, without either party having to give notice.

Fixed-term leases are typically used in situations where the landlord knows the home will be needed again after a certain period, for example a temporary stay abroad, a leave of absence or a renovation.

When is a fixed term lawful?

Under the consolidated Rent Act (from 2022), a fixed term is only valid if it is sufficiently justified by the landlord's circumstances, and the justification must appear clearly from the lease. If the fixed term is not sufficiently justified, the tenant can, under section 165 of the Rent Act, have it set aside by the rent tribunal or the housing court.

Typical lawful justifications are:

• The landlord is to move back in: the landlord normally lives in the home but has moved out temporarily, for example because of work abroad or a study stay
• A sale of the property: the home is for sale, and there is a realistic expectation of a sale
• A major renovation: the property is to undergo a renovation that requires the home to be empty
• Another specific reason in the landlord's circumstances

Vague or constructed justifications are not accepted. "The landlord wants flexibility" is not a lawful justification.

What happens if the fixed term is invalid?

If the fixed term does not meet the law's requirements, the tenant can have it set aside, and the tenancy then continues as open-ended. This means:

• The tenant cannot be forced out on the agreed expiry date
• The landlord is bound by the Rent Act's ordinary notice rules, which give the tenant strong protection
• The result becomes the opposite of what the landlord wanted to achieve

Requirements for the wording in the lease

It is not enough to write "the tenancy is fixed-term". The lease must contain:

1. The specific justification, for example "the landlord returns from a work stay in Sweden on 1 August 2027"
2. The end date, that is a precise date for the end of the tenancy
3. The tenant's acceptance of the term by signature

The fixed term and the justification are written in the special terms section (section 11) of the authorised standard lease (Type form A).

Can a fixed-term lease be extended?

Yes, but an extension requires a new written agreement. If the tenant continues to live in the property after the expiry date without a new agreement, and the landlord receives rent without objecting, the tenancy can be regarded as continuing as open-ended.

It is recommended to:

• Send a written reminder to the tenant a couple of months before expiry
• Agree in writing what happens on expiry: moving out or extension
• Avoid receiving rent for the period after expiry if the tenant has not moved out

Notice and moving out on expiry

When a lawful fixed-term lease expires, the tenancy ends automatically, without notice being required. It is, however, recommended to:

• Send a written reminder to the tenant around 3 months before expiry
• Confirm the move-out date and plan a move-out inspection

Even though notice is not required, communication is good practice and prevents disputes.

What applies if the tenant does not move out?

If the tenant does not move out on the expiry of the contract, and the fixed term is lawful, the landlord can bring the matter before the enforcement court to obtain an eviction. The process can take time, so it is important to act in good time.

If the landlord is in doubt about the validity of the fixed term, it is wise to seek legal advice before going to the enforcement court.

The fixed term and the tenant's other rights

A fixed-term tenant's right to have the rent reviewed by the rent tribunal is not limited by the fixed term. The tenant can still:

• Bring the rent before the rent tribunal
• Complain about defects
• Rely on their other rights under the Rent Act

The fixed term only limits the duration of the contract, not the tenant's other rights.

The standard lease

For most private residential tenancies, the authorised standard lease (Type form A) must be used. Terms that place the tenant in a worse position than the Rent Act, including a fixed term, must appear clearly in the special terms section (section 11) to be valid. If the justification for the fixed term does not appear in the lease, the fixed term is as a rule not valid.

The most common mistakes in fixed-term leases

1. No justification. The missing, specific justification in the lease is the most common mistake, and it can make the fixed term invalid.

2. Too vague a justification. "The landlord may need the home" is not enough. The justification must be specific and genuine.

3. The landlord receives rent after expiry. If the tenant continues to pay rent and the landlord receives it without objecting, a new, open-ended tenancy can arise.

4. A fixed term used to circumvent the notice rules. A fixed-term lease cannot be used to circumvent the tenant's notice protection if the fixed term has no genuine justification in the landlord's circumstances.

Conclusion

A fixed-term lease is a lawful tool, but only when the fixed term is sufficiently justified by the landlord's circumstances and the justification appears clearly in the contract. Otherwise, the landlord risks the tenancy becoming open-ended. Use the authorised standard lease, word the justification specifically, and avoid receiving rent after expiry if the tenant has not moved out.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer for advice on your specific situation.