One change of legislation that’s recently changed in NZ’s rental landscape is the fixed-term tenancy. The rules shifted in May 2025, giving property owners more clarity. But, with that landlords also have more responsibility.
Below, I’ll walk you through:
- What a fixed-term tenancy is
- What’s changed
- The pros & cons for landlords and tenants
- When it makes sense (and when it doesn’t)
- How to use fixed-term agreements wisely
1. What is a fixed-term tenancy?
A fixed-term tenancy is a rental agreement with a clear start and end date (for example, 6 or 12 months). Within that term:
- The tenant can’t simply decide to leave early (without agreement or legal grounds).
- The landlord can’t end the tenancy before that date (unless both parties agree or there are permitted exceptions).
That stability gives both sides more certainty around duration, rent, and planning.
Prior to the 2025 changes, a fixed-term often “rolled over” into a periodic tenancy automatically at the end. That’s no longer the case. Now, the contract ends unless you deliberately renew or convert it.
2. What changed in May 2025?
The key shift: fixed-term tenancies are truly fixed again. That means:
- Tenants don’t get to automatically stay on once their fixed term ends.
- Landlords have more control over decisions at the end of the term.
- The tenancy doesn’t automatically rollover to a periodic tenancy
These changes give more control back to the property owner. This means that you can plan for turnover, renovation, or other changes more confidently.
3. Pros & cons -for landlords and tenants
✅ Benefits of fixed-term tenancies
For landlords:
- Predictable rent income for the period of the fixed term
- Easier financial planning and budgeting
- More control over when you can do inspections, maintenance, or changes
- Less administrative turnover (if tenants stay full term)
For tenants:
- Knowing you can stay put for the agreed period
- Protection against sudden notices to vacate
- Stability, especially for families, professionals, or students
⚠️ Downsides of fixed-term tenancy
For landlords:
- You can’t “call it quits” early (unless mutually agreed)
- If you plan to sell or renovate, you may be stuck waiting
- If the tenant is problematic, your options are more limited until term end
For tenants:
- Lack of flexibility if life changes (job move, family, etc.)
- If you need to leave, you may still have to pay rent until a new tenant is found
- You’ll have to cover reasonable costs for the property to be re-tenanted(advertising, admin)
4. Is it possible to get out early?
Yes. But only under certain conditions. Let’s break them down:
- If both parties agree. The landlord can permit early termination. The tenant may need to cover actual and reasonable costs (advertising, letting fees, etc).
- Finding a replacement (assignment). The tenant finds someone acceptable to take over the remainder of the tenancy. The landlord must consider the new applicant fairly.
- Family violence. If the tenant or someone in the household is experiencing family violence, they can end the tenancy with 2 days’ written notice with proof.
- Severe hardship. The tenant can apply to the Tenancy Tribunal, arguing exceptional circumstances justify early termination. The Tribunal assesses fairness.
So fixed-term doesn’t mean zero flexibility. There are safety nets and legal paths for early exit, but they’re stricter than periodic tenancies.
5. Can landlords end a fixed term early?
Nope, not unilaterally. Once the fixed-term agreement is signed, you can’t end it early unless:
- The tenant agrees
- You both follow legal break clauses specified in the agreement
- There’s an agreed assignment
- Some very rare, permitted circumstances
After the fixed term ends, though, you must give between 90 and 21 days’ written notice if you choose not to renew. And you don’t need to give a reason.
6. Rent increases under fixed-term
Yes. But only if the tenancy agreement allows for it. Common rules:
- Landlord can raise rent once every 12 months
- Must give at least 60 days’ notice
- The increase must align with what was agreed (e.g. a clause in a longer agreement)
Important tip: If you sign an 18-month fixed term, check that you have a clause in the tenancy agreement that allows you to increase the rent after 12 months.
7. Fixed-term vs periodic – which is better?
Fixed-term is great when:
- You want certainty over income & occupancy
- You have plans (sale, renovation) that align with an end date
- You expect tenants with more transient needs (e.g. students, professionals on contracts)
Periodic might suit better when:
- You want flexibility
- You prefer to have the control to end the tenancy with notice
- You anticipate wanting to make changes soon
At Renthub, we help weigh these decisions per property and per owner, making sure the choice supports your goals.
8. Tips for landlords using fixed-term tenancies
- Be transparent: Make sure the fixed-term, renewals, rent-increase clause, and break conditions are clearly in the agreement
- Plan your turnaround time: Know how long it takes to re-tenant so you’re ready before the end
- Keep good records: For costs you might recover if a tenant breaks their lease early
- Communicate early with tenants: Talk about renewals around 90 days before the end of the tenancy.
Final word
Fixed-term tenancies are once again a powerful tool in the NZ property investor’s toolbox. They provide security and predictability when used thoughtfully. But they’re not one-size-fits-all.
At Renthub, we don’t just manage properties – we partner with you to choose the right lease approach, reduce risk, and make transitions seamless.
Get in touch if you want help assessing whether fixed-term suits your portfolio – we’d love to chat.
