Is the government planning to pull the plug on 3 year tenancies?
Reports have emerged this week that the government is planning a U-turn on its proposals to introduce mandatory minimum 3 year tenancies in the private rented sector.
This comes not even two weeks after the official consultation period on the measures closed on August 26.
The Sun is reporting that the Treasury is opposing long-term tenancies as it could scare off investment in property development.
The paper’s political editor, Tom Newton Dunn, quotes a ‘senior government source’ as saying: “Hammond and May are both losing their bottle on three-year tenancies, for different but equally pathetic reasons.”
“It’s a proper election winner but they’re going to blow it.”
It is believed the policy will now be ‘watered down’ to a voluntary system amid fears it would be defeated in the House of Commons by a small number of rebel Tory MPs.
The proposals for minimum three-year tenancies were unveiled by Housing Secretary James Brokenshire in early July.
At the time, he said: “It is deeply unfair when renters are forced to uproot their lives or find new schools for their children at short notice due to the terms of their rental contract.”
“Being able to call your rental property your home is vital to putting down roots and building stronger communities.”
The consultation document proposed introducing a minimum three-year tenancy agreement with a six-month break clause for both landlords and tenants.
In the event that both parties were happy after the initial six months, the tenancy would continue for the full term.
The proposals included outlining exemptions for short-term lets and student tenancies, while also explaining how a landlord could recover possession of their property during a fixed-term agreement.
Brokenshire’s plans were met with staunch opposition from the majority of the property industry and were roundly criticised by the CLA as well as a number of high-profile agents, including JLL’s Lucy Morton and Benham & Reeves Residential Lettings’ Marc von Grundherr.
Meanwhile, a study by online letting agent MakeUrMove reveals that only 7% of tenants would prefer a tenancy lasting three years.
Some 30% of renters surveyed by the agency said they want tenancies to last 12 months, with a further 20% wanting a tenancy that lasts no longer than two years.
“Our study suggests three-year minimum tenancies aren’t going to address tenants’ key concerns around their rental properties,” says Alexandra Morris, managing director of MakeUrMove.
“The government has once again looked at an issue in isolation with no regard for other related issues and proposed regulations.”
“We believe that in order to make the rental market work for everyone, someone needs to take a step back and look at the cumulative effect of all changes to the market.”