Longer term tenancies – a step in the right direction?
The government has recently considered the roll out of longer tenancy contracts within the private rental sector. This was outlined in their recent white paper ‘Fixing our broken housing market’ which reflects proposals for longer tenancies to be sought from new build rental homes. This on face value seeks to attract tenants who are not looking to climb the property ladder and are suited to calling the property they’re renting, their home.
Shelter, the housing charity, expresses the need for longer tenancies where housing situations for families with children or where tenants are growing old in a rented home need confidence they will be able to remain in a property. Shelter have stated ‘43% of families renting worry about losing the home they currently live in’. This proposal is deemed an attractive prospect which increases tenant stability and reduces void periods for landlords giving them guaranteed rental income for longer periods of time.
But what else does this mean for landlords? On the upside, tenants who wish to remain in a property for a longer period reflect a mutual interest to maintain and upkeep the property they are residing in which is an attractive prospect to a landlord. This, in turn, can minimize the costs to a landlord, the tenant feels they are investing in the property and their future residing in their home. As an example, long-term tenants may redecorate if they have the assurance they are able to reside in the property for a few years.
However, longer tenancies can make it difficult for landlords to review rent at regular intervals. This helps to keep rent in line with rising interest rates and mortgage repayments. Shelter has proposed reform including a ‘Stable Rent Contract’. This integrates rent increases with rising inflation rates within the tenancy contract. On the contrary, the RLA has pointed out this model does not allow for flexibility for times where there are shocks in the housing market.
Longer term tenancies will be discretionary and dependant on both the tenants and landlords needs. The models proposed are not flawless and do not work for everyone. Going forward this may be an area which is investigated further and will come into practice more to support the needs of those, dependant on the rental market.
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