The advantages of a fixed-term lease for a landlord are predictable rental income and financial stability, and reduced vacancy and turnover costs. They also enjoy stronger lease enforcement and legal protection, and easier long-term property and investment planning.
According to the University of Mississippi, the rental crisis is ebbing in Memphis, TN, as of 2025. Still, as a landlord, you want to attract as many tenants as you can, and one way to do this is to offer attractive lease terms.
For instance, you can consider the fixed-term lease, which is something many landlords opt for. But is this the right choice for you, and what are the benefits that come with this lease option?
What Is a Fixed Term for a Lease?
A fixed term for a lease is a type of rental agreement that lasts for a specific and predetermined period of time. Most commonly, this is for six months or one year, although it can be longer or shorter, depending on the arrangement.
Tenants will know exactly how long they can stay and what they will pay. And landlords get peace of mind knowing they have consistent rental income for the duration of that term.
When the fixed term ends, the lease can be:
- Renewed
- Converted into a month-to-month (periodic) tenancy
- Ended
What Are the Advantages of a Fixed-Term Tenancy?
After understanding what a fixed-term lease is, you might be curious about having this offering for your tenants. Before you make such a choice, find out what the fixed lease benefits are first.
Predictable Rental Income and Financial Stability
One of the biggest advantages you can get from a fixed-term tenancy is consistent and predictable rental income. This is because the renter is contractually committed to stay for the full lease period, which allows you to accurately forecast your cash flow and plan expenses, such as:
- Mortgage payments
- Maintenance
- Taxes
- Insurance
This can be especially valuable if you depend on your rental income as part of your overall financial strategy. There’s a lot less stress, as budgeting, reinvesting, and long-term planning are much easier and more reliable.
Reduced Vacancy and Turnover Costs
The key to strong ROI is reduced vacancy periods, and you can achieve this with fixed-term leases.
Every time a tenant moves out, you have costs for:
- Cleaning
- Repairs
- Marketing
- Lost rent during the vacancy period
But fixed-term tenancies help minimize these turnover costs by keeping your property occupied for a guaranteed period of time. Your renters are locked into an agreement, which lets you avoid frequent move-outs and the administrative burden that comes along with that.
These longer tenancies also encourage tenants to treat your property like their own homes. As a result, this can reduce wear and tear.
Stronger Lease Enforcement and Legal Protection
What’s great about a fixed-term tenancy is that it provides you with clearer legal protections. You also have stronger enforcement options compared to more flexible arrangements, such as with periodic tenancies.
Since the renter has agreed to remain in your property for a specific period, it’s easier to hold them accountable for breaking the lease without proper cause. This means you can:
- Recover unpaid rent
- Enforce notice requirements
- Apply early termination penalties (if allowed by law)
The fixed-term structure also reduces ambiguity around expectations. Both you and your tenants know the timeline and conditions right at the start.
Easier Long-Term Property and Investment Planning
It’s hard to plan ahead when you don’t know exactly when tenants will move out or in. But fixed-term leases make it much easier, both financially and strategically.
Knowing exactly when a lease will end lets you schedule the following well in advance:
- Renovations
- Rent reviews
- Property sales
- Personal use of the property
If you’ve invested in multiple properties, then aligned lease terms can simplify portfolio planning and workload management. And when you have stable tenancies, this will reduce management time and stress. As a result, you can make smarter and more confident decisions.
Frequently Asked Questions
Which Is Better, Fixed or Periodic Tenancy?
Both fixed and periodic tenancies have their pros and cons. As you already know, a fixed-term lease offers predictability and security. So this makes it a better choice for those who value rental stability and long-term planning.
However, a periodic tenancy offers more flexibility. This comes at a cost, though; there’s less certainty.
In summary, a fixed term is better for stability, and a periodic tenancy is better for flexibility and short-term needs.
Can You Increase Rent During a Fixed Term?
In most cases, you can’t increase rent during a fixed-term lease. The exception is if the lease agreement specifically allows it or the tenant agrees in writing.
The whole point of a fixed-term lease is that key terms are locked in for the duration of the contract. Do note that some leases include a rent review clause, which allows for a scheduled increase of rent at a certain date or under certain conditions.
Local and state laws may also regulate how and when rent increases are allowed. So you should always check legal requirements before making changes.
Can a Landlord Break a Fixed-Term Tenancy?
Generally speaking, a landlord can’t break a fixed-term tenancy before it ends unless there’s a valid legal reason or a specific clause in the contract that allows it.
Valid reasons for breaking a fixed-term tenancy are:
- Tenant not paying rent
- Tenant causing significant property damage
- Tenant engaging in illegal activity
A Fixed-Term Lease Has Its Benefits
As you can see, a fixed-term lease has several benefits, as does a periodic lease. Because of this, it’s up to you as the landlord to pick the one that makes the most sense for your situation.
Of course, you don’t have to handle these issues alone. There are property management companies that can assess your situation and make the decision for you, so you don’t have to stress out.
To get help with your properties, get in touch with us now. Reedy & Company has over 40 years of experience, and we are one of the leading property management companies in the local area.
