When is a short-term lease advantageous?

Since tenancy law was regionalised, new rules have applied to short-term tenancies.

A short-term tenancy is a tenancy entered into for a term of three years or less, while a “standard” tenancy has a term of nine years.

Previously, the tenant could not leave the property unless they paid substantial compensation which, in theory, amounted to the rent remaining due under the tenancy agreement.

Today, this is no longer the case. It is easier for the tenant to terminate a short-term tenancy: three months’ notice and compensation equivalent to one month’s rent are sufficient.

Example

In theory, a tenant could give notice after occupying the property for just two weeks and leave three months later, paying only a one-month penalty… This clearly offers landlords less protection.

And what about the landlord?

However, it is also easier for a landlord to terminate a short-term tenancy. From now on, if the landlord wishes to occupy the property personally or have it occupied by a close relative, they must give the tenant three months’ notice and pay them compensation equivalent to one month’s rent. They must nevertheless wait until the expiry date for tenancies with a term of less than one year!

By using a “standard” nine-year tenancy, the landlord is better protected against the tenant leaving early, as they will receive higher compensation: three months’, two months’ or one month’s rent, depending on whether the tenant leaves during the first, second or third year of the tenancy.

Therefore, as a tenant, it is more advantageous to opt for a short-term tenancy if you do not intend to live in the property for three years. However, as a landlord, if you do not want your tenant to be able to terminate the tenancy easily, a nine-year tenancy is the best option.

A few additional rules:

• As the nine-year tenancy is the standard arrangement, a short-term tenancy remains the exception. This means that it is very important for the short-term tenancy agreement to be in writing AND registered, so that the type of tenancy entered into can be proven;
• A short-term tenancy may only be extended up to a total term of three years, after which it will become a standard nine-year tenancy;
• In theory, at the end of the three-year term, the tenant and/or landlord must give notice in accordance with the three-month notice period, failing which the tenancy will automatically be renewed as a nine-year tenancy.