Overcoming the barriers to longer tenancies in the private rented sector

The Ministry of Housing, Communities and Local Government (MHCLG) have launched a consultation regarding longer tenancies within the private rented sector. This is an eight week consultation and the closes on 26 August 2018.

The consultation is seeking comments on the benefits and barriers of landlords offering longer tenancies. MHCLG have proposed a model for a three year tenancy with a six month break clause along with the options for implementation of this. MHCLG believe the model has been designed to give tenants certainty over rents whilst retaining the flexibility that many tenants desire.

There is a question mark regarding mortgage lenders, the majority of whom would need to change their rules around the maximum tenancy term permitted.

The proposed three year model tenancy comprises:

• Three year tenancy agreement with a break clause after six months if either party wish to end the agreement
• In the event that the landlord and tenant are both happy the tenancy will continue for another two and a half years.
• During this period the tenant could end the tenancy by giving at least two months’ notice
• Landlords would be able to gain possession of their property during the fixed term if they have reasonable grounds, as set out in Schedule 2 of the Housing Act 1988. Additional grounds would include the landlord moving into the property themselves or selling the property.
• Rent could be increased every year at a rate which was agreed in the tenancy agreement.
• Exemptions for certain sectors of the market, i.e. student lettings and short term lets.

It is important that a new model balances tenants’ need for protection with a landlords’ need to regain possession of their property when they experience a change in their circumstances. According to the consultation, in recent research conducted by the Residential Landlord Association, 63% of landlords reported that tax relief would encourage them to offer a longer tenancy.

Tenants could benefit from greater security within the private rented sector. The consultation states that 41% of households in the private rented sector do not expect to move into home ownership. Longer tenancies could provide a form of consumer protection to the tenant. Ensuring that tenants can confidently make a complaint when they are entitled to, without the fear of eviction.

This could be one of the most important consultations that will affect landlords within the private rented sector. PRSP will be responding on behalf of its member, should you wish your views to be included in the response, do email us your views by 1 August 2018.

https://www.gov.uk/government/consultations/overcoming-the-barriers-to-longer-tenancies-in-the-private-rented-sector?utm_source=7b367414-4ed1-4427-be64-0b1f7d10e4af&utm_medium=email&utm_campaign=govuk-notifications&utm_content=daily