There has been considerable backlash from landlords, aimed at communities and local government secretary, James Brokenshire, after he put forward proposals that tenancy agreements should have a minimum 3 year term.
The proposal also said that tenants should be able to terminate the agreement early, and that the proposals would prevent landlords from being able to terminate leaseholds with very little notice and without having to give an explanation of why. The NLA has called the consultation a “political move” and said that their own surveys show that the majority of tenants do not want longer tenancies. However, not everybody is opposed to the move.
Homeless charity, Shelter, has welcomed the move, saying that “everyone who rents will be very pleased to see a move towards longer tenancies.” Labour, who have made calls for similar proposals in the past that were thrown out by the Conservative government, have said that the proposal does not go far enough. The government has said that the three-year tenancy agreement is one of a range of options that are being looked into.
The proposal has been put forward by James Brokenshire, the communities and local government secretary. The proposals suggest that tenancy agreements should be set with a three year minimum term. Currently, 80% of tenancy agreements are for a period of 6 or 12 months.
The consultation also suggests that tenants would be able to leave sooner than the 3 year term, and suggested that the new plan would give landlords greater financial security than they currently have.
The consultation, which also includes other proposals and ideas, will run until the end of August, and is specifically asking whether there should be some exemptions to the new rules, for example for student accommodation during term time.
According to the government documents, the government is proposing a minimum 3 year tenancy is introduced. They have said that they would like a 6 month probationary period built into these agreements, and have said that the aim of the proposals is to enable “renters put down roots” and that it will help to “give landlords longer term financial security.”
A lot of people seem opposed to the idea, including tenants, but especially the National Landlords Association, which represents landlords across the country. They have said their own research consistently points to the fact that as many tenants do not want longer tenancy agreements as those that do. 40% said that they would welcome longer agreements, and 40% said that they don’t want them. 20% also said that when they requested longer tenancy deals, they were granted by the landlord or agent.
NLA chief executive officer, Richard Lambert, said that the proposals would set the letting market back decades. The current system was meant to offer greater flexibility to landlords and tenants, and replaced a more rigid system. Lambert likened the proposed changes to “urging someone to update their 1980s brick-style mobile phone, but instead of giving them a smartphone, offering them a Bakelite dial phone plugged into the wall.”
He went on to point out the perceived hypocrisy of the plan, saying “this is a policy which the Conservatives derided when it was put forward by their opponents in the past two General Election campaigns. It is hard not to see this as more of a political move aimed at the renter vote…”
The NLA wasn’t the only group to hit out at the proposals. Shadow housing secretary, John Healey, said “any fresh help for renters is welcome but this latest promise is meaningless if landlords can still force tenants out by hiking up the rent” and went on to say that the government should introduce rent caps at the same time because this would prevent landlords from forcing tenants out in this way.
Homeless group, Shelter, had similar and additional concerns. They are actually calling for 6-year or even permanent tenancies, which are enforced in multiple countries across Europe and even as close to home as Scotland.
Shelter has also questioned the idea of a 6 month probationary period. The consultation suggests that tenants and landlords should be able to exit their tenancy after the first six months of the agreement, but the charity has pointed to the fact that this very provision has just been scrapped in Ireland. There are very few instances where this probation period exists.
At PDF Estates Ltd, we believe in long-term relationships between landlord and tenant, but there are a lot of questions over the validity and viability of the proposed 3 year minimum tenancies. Changing the rules could also leave some landlords with mortgage difficulties. A lot of existing Buy To Let mortgages are agreed on the basis that the landlord will offer 12 month tenancies.
Most tenants are looking for longer term tenancies than are currently standard. Foster a positive relationship with tenants while ensuring that you price rent fairly. Complete checks and repairs as soon as possible, and always be reasonable when it comes to dealing with tenant requests. This will help you keep better tenants, while the quality and upkeep of the property will help to attract longer term tenants.
At PDF Estates Ltd, we help develop long-lasting relationships between you and tenants. We can prepare your property ready for tenants to move in, source those tenants, and deal with every element of managing tenants on a daily basis. We can arrange for regular safety checks, collect rent, and help minimise tenancy void so that you have a consistent and ongoing line of revenue coming in. Call us on 020 3815 7952 or email email@example.com to talk about our free property management offer for our new clients.