Why aren’t there more longer tenancies for private residential properties?
Posted on 9 August 2018 by Ella Carroll
The Ministry of Housing, Communities & Local Government has recently launched a consultation on “Overcoming the Barriers to Longer Tenancies in the Private Rented Sector”. The consultation is looking at what can be done to encourage or even compel landlords to grant longer tenancies. The hope is by granting longer tenancies, it will lead to greater stability for both tenants and landlords.
The consultation suggests that the reason for tenants taking up short tenancies is because it has been the norm since the introduction of Assured Shorthold Tenancies (“ASTs”) under the Landlord & Tenant Act 1988. In other words, an entire generation has been used to short 6-12 month fixed term tenancies.
The consultation has come about because the Government is worried by the fact that 38% of households in the private rented sector are families with children in schools and that even if the tenant pays rent on time, they are open to the risk that they may have to uproot their children after the fixed term expires (ie. 6-12 months). Furthermore the ending of ASTs is the leading cause of homelessness due to the demand for private residential lettings.
The Government is consulting on whether a carrot or stick approach should be used. The carrot being tax breaks for landlords if they offer longer tenancies, and the stick being making the fixed term for ASTs 3 years (unless exceptional circumstances apply). The idea behind the stick approach is the tenant would get a probationary period of 6 months after which if both parties were happy, the tenancy would continue to the end of the 3 year term. The proposals wouldn’t prevent a landlord evicting a tenant who is in default (ie. rent arrears) and would still allow the landlord to increase the rent every 12 months, on the proviso the tenant was warned of the maximum possible rent at the outset of the tenancy. The consultation closes on 26 August 2018.
Unfortunately, it seems the consultation may result in even more regulation in an already extremely regulated area of law and whilst home ownership is declining and renting increasing further regulation may put off investors.
If you need advice in relation to any Landlord & Tenant issue, contact our Landlord & Tenant expert Ella Carroll on 01935 385984.
Posted in: Landlord & Tenant/Housing