Government Not Going Ahead With 3 year tenancy agreements
It seems that the government may have decided not to ‘enforce’ its proposed 3 year tenancy agreements onto the privates rented sector.
According to a major broadsheet this week the government’s plan may have been stopped by the Treasury, because it believes that it could put people off of investing in the sector.
The government was hoping by offering private renters 3 year tenancy agreements it would give them greater security to allow them to lay down roots; however many landlords believe that it will cause them even more problems.
The 3 year tenancy agreements will not help landlords wanting to evict a bad tenant and it could also be harder when applying for a BTL mortgage as lenders may be put off by the six month probation period, prior to a three year tenancy going ahead.
The supposed decision of the government’s turnaround on implementing 3 year tenancy agreements has been described by Simon Heawood, CEO of an online property investment platform, as a “baffling turnaround by the government”.
Heawood backs three-year tenancies as he feels that they are a better option for landlords and tenants.
He said: “Forward thinking landlords like us are already offering three-year tenancies as standard, for commercial reasons.
“Giving tenants more security is not only right, but also generates better financial returns for investors.
“Our customers value the fact that tenants are able to feel at home, without compromising investment returns, or having the responsibilities of being a landlord themselves.”
However, a recent study carried out by an online letting agent found that a large majority of tenants are quite happy with twelve month contracts, rather than the introduction of three year tenancies.
The research states that nearly a third of tenants (30%) want twelve months’ agreements and 20% feel that two year tenancies are long enough.
The results of the survey shows that many tenants like the flexibility to move on after twelve months due to employment opportunities or just having the freedom to choose where to live, as 31% said the short term tenancy agreement is very important when deciding on where to live.
However 29% of tenants said they would prefer a longer period of three years, and 43% had stayed in their present accommodation more than five years.
Managing director of the online agency, Alexandra Morris, said: “Many tenancy agreements are currently set at twelve months with a six months break clause
The point at a contract can be terminated by the tenant or the Landlord – must be a fair term
and we’ve found nearly a third of tenants are happy with this length.
“Our findings reinforce that the majority of people want either the flexibility of a shorter rental, or the security of a much, much longer term.”