Longer Tenancies – Again

longer tenancies

The topic of longer tenancies has again reared its’ (to many buy to let investors) ugly head. The new Housing Minister, James Brokenshire, seems to be in favour of longer tenancies, as do members of all parties. It is easy to see the benefits of longer tenancies for tenants, but it cannot be denied that this increases the risk to the landlord.

The good news is that there is some recognition that landlords must be recompensed for accepting this greater risk of longer tenancies. Sir Robert Sym, Conservative member for Poole said ‘Somehow, the Government, perhaps through tax incentives or Capital Gains incentives, have to try and ensure that leases of 3 or 5 years are available to families’.

This would perhaps reduce pressure on families and lead to more stable communities; areas where there are frequent changes of tenant begin to look unkempt and unloved.  Educational establishments in the area that changes find their results going down. The effects are seen throughout the local community; in the youths that see themselves as only temporary (and perhaps unwelcome) residents; in neighbour nuisance – nobody wants us, so why do we care?

Whilst statistics seem to indicate that most tenancies end at about the 3-year mark, is this because tenants are told, and expect to leave, before a longer tenancy is achieved? Would a 5-year tenancy have made a difference?

In a recent survey under taken by a leading landlord association, of the nearly 3,000 landlords approached, 63 per cent said they would offer a tenancy of 1 year or more. This could be seen as a mass movement to end the assured shorthold tenancy, though whether this is the case is debateable – an assured shorthold tenancy could be issued for 1 year and longer and the section 21 still be used as a ground for eviction.

Many landlords may be quite happy to offer longer tenancies, expecting that long-term tenants are more likely to look after the property (though not necessarily so). But even the tenant who lives in filth may be acceptable, if they stay a long time and do not expect too much in the way of refurbishment. It is cheaper to have a tenant who, for 10 years, has paid the rent and asked for no replacement carpets and decorating, than new tenants ever 6 or 12 months with the consequent expenses.

These kinds of situations create problems though, in that a certain standard must be maintained; a spiteful tenant, who may have denied the landlord access, is still capable of making a complaint to the enforcement service. There are landlords prepared to take a greater risk, but they need to know there are safeguards in place that they could, with an acceptable ground, evict the tenant.

There will need to be more consultation and legislation to make this a realistic option. Nearly 1 in 4 of the landlords surveyed said that their mortgage providers forbade longer tenancies.  It is heartening that the compulsion to offer longer tenancies, which Labour mooted before the general election seems to have been replaced by incentivising and this seems a fair way of achieving the aim of improving tenant security.

However, perhaps a 2-step system, where a landlord starts a tenancy with a 6 or 12-month fixed term, allowing them to get to know the tenant and be able to then make a risk assessment based on knowledge, and then accept the incentive to offer a longer tenancy, may allow landlords some degree of security too.

For advice on buy to let issues – Ask Sharon

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