Tenancy lengths and the call for longer term tenancies
The debate trundles on, as to whether the PRS needs to have standardised or longer term tenancies in place for all tenants, but it does pose the question, with some tenancies being for literally hundreds of thousands in the city of London, to wealthy business people and other tenancies being for a few hundred per month in the north, let to LHA tenants or low income families, how can one size really fit all?
Longer term tenancies, could be both a good thing and a bad thing and I really can see both sides… As landlords and letting agent, we all want the PRS to be the tenure of choice, therefore offering more security for tenants, can only be a good thing, but should this be at the expense of the landlord’s choice?
I don’t believe so, the system we need to be looking into is one where landlords have a choice, and tenants make their choice, bearing in mind the landlords position too, or else we may see a mass evacuation of properties being made available to the PRS and a massive rise in rents as supply dwindles.
Let’s also remember that right now, many landlords are already reassessing their position, due to the increase in stamp duty, loss of mortgage interest relief changes, the legal changes in Wales and Scotland, the rise of Airbnb’s short term lettings taking many properties off the PRS market and not forgetting the massive increase in legislation under the de-regulation bill, the pending Housing Bill and not to mention the criminalisation of landlords and agents under immigration act too.
The issues are that the current proposals on the tale, are not fit for purpose for all sectors and do not solve the issues at hand, The PRS houses such a range of families, singles, commercial, professionals, those in transit, short term, long term, settled and very unsettled families, how can we serve all with one contract…?
What I see if these long term contracts of 3 or 5 years, become enforced on the whole sector, is a massive withdrawal of so much housing stock, which could be useful for those only wanting short term, so why should these be removed from the market, when some tenants just want short term and some landlords can only offer?
In my experience, and having worked across many of the tenant group, from Students, LHA, HMO and professional sector landlords, there are many tenants, that just do not want longer term, and these are:
- People moving into the area for work, on contracts, do not want long term tenancies
- Students want under one year
- Companies want a fixed term short term contract
- People coming into the country on Visa’s only want a short period
- Newly divorced and separated people are in transition and only want a short term contract,
- Those leaving home for the first time generally only want short term “just in case”
- New relationship tenants usually want to commit to a short term tenancy
- HMO tenants quite often are in transition and only want short term initially
- Many LHA tenants that we work with also want short term also, as they are hoping to move on to better areas/bigger properties when they get themselves sorted
- Those needing accommodation due to insurance claims such as their own home flooding normally only want 3-6 months
What do landlords think about the longer term tenancies?
Most would welcome a longer term contract as VOID or empty periods are the Bain of every landlord’s life, but in reality, already tenants can request longer term tenancies, and are not doing so… for many years, in my company we have allowed 2 year contracts, and around 1 in 200 opt for a 2 years’ contract but in nearly every case, it is the tenants that end up breaking the contract, as they want to buy, move elsewhere or the relationship changes, but it’s certainly not something that is discouraged where it is possible to offer it.Some landlords however cannot rent long term
- Those that are moving overseas for work for a fixed period of say 12 months, would not be able to rent their home on long term contracts
- Those with mortgages currently as these are forbidden to be long term in the main
- Those who will have financial difficulty under the new TAX regime and be looking to offload, before the full effects take place
- Those coming towards the end of their mortgage period and needing to re-mortgage or sell
- Those in the services for a lessor period than the required minimum period
- Many with Leasehold properties as the lease often puts restriction on the length of tenancies
- Those that are themselves in a transitional period in their lives and circumstances may change, these could include;
- New relationships in trial periods themselves, who have perhaps moved in with new partners and renting out their own home
- Those inheriting a property through bereavement
- Those being forcibly purchased due to railways or motorway construction
- Recently separated and awaiting divorce asset allocation decisions
- Landlords with high mortgage payments who would be in financial difficulty if the interest rate rose during the 5-year period
