Three Year Tenancies – Possible tax incentives are welcomed
Buy to let landlords are welcoming proposals being considered by the government to provide financial incentives for those offering longer tenancies.
In its much-publicised consultation on the issue, the government is proposing a number of options to implement a three year tenancy model addressing the demand for longer tenancies from the growing numbers of families and older people in the private rented market.
One of these options proposes ‘financial incentives’, which the government argues “could be quicker to implement” than mandatory three year agreements.
“With landlords having faced a barrage of tax increases we believe that smart taxation, such as that being proposed today, would provide the longer term homes to rent many families and older people want” explains David Smith, policy director for the Residential Landlords Association.
“We would warn against making it a statutory requirement to introduce three year tenancies. Many tenants simply do not want to be tied to a property long term. It is vital that the market is able to provide the flexibility that many need in order to swiftly access new work and educational opportunities.”
You can see the government’s full consultation document on longer tenancies here.
Meanwhile Build To Rent operators have come out strongly in support of the government’s proposed three year tenancies in the private rental sector.
The government over the weekend revealed that it would be consulting on plans to have three year tenancies as standard, with a six-month break clause and some exemptions for renters such as students. More detail was fleshed out by the government yesterday.
“It makes sense that residents are given security of tenure. So we support these moves provided people have flexibility if they only wish to stay for a year or two. We need a customer-centric rental market if people are to grow confidence in the property sector” says Johnny Caddick, managing director at Moda, a BTR developer building a £2 billion portfolio across England and Scotland.
“That has to mean encouraging more rental development through the planning system that is willing to provide better homes with no risk of eviction because the landlord wishes to sell or move back in.”
Get Living, the Build To rent operator well known for its 1,500 homes at East Village, the former London 2012 Athletes’ Village, says it already offers three year tenancies as standard.
“Renting shouldn’t be a second-rate choice to homebuying. With three-year tenancies and resident-only break clause after six months, residents have the reassurance of long-term security while having the flexibility to follow their careers or their thirst for adventure, without being tied in to a home” explains Neil Young, Get Living’s chief executive.
“With more than 20,000 Build to Rent homes complete across the UK and almost 100,000 more in the pipeline, our sector is starting to show that, done right, renting can offer much more than it’s given credit for.”
Last year Get Living scrapped security deposits and returned millions of pounds to its existing residents.