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Government Calls Quits on Plans to Introduce Three-Year Tenancies
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The Government has reportedly scrapped proposals that will give tenants a three-year contract.
According to an article in The Sun, the Treasury blocked the plans due to concerns that it could deter people from investing in the buy-to-let sector.
The idea behind the intention was to offer private tenants greater security and enable them to put down roots. However, a number of buy-to-let landlords feared that the risks may far outweigh the benefits.
Aside from making it harder for landlords to deal with problematic tenants as they would be locked into a longer-term agreement, there were also concerns that three-year tenancies could potentially make it harder for buy-to-let landlords to finance their property purchases.
The move to scrap three-year tenancies has been described by Simon Heawood, CEO and founder of Bricklane, as a “baffling turnaround by the Government”.
Heawood is in favour of three-year tenancies as he believes that they are “better” for both landlords and tenants.
He commented: “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 generating 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 by online letting agent MakeUrMove has found the overwhelming majority of tenants do not want three-year tenancies, instead preferring 12-month contracts.
The research found that 30% of tenants want tenancies to last 12 months, and a further 20% want tenancies to last for no more than two years.
These findings show many tenants prefer flexibility and freedom when it comes to tenancies, with 31% saying flexibility was the most important factor when looking at the length of their tenancy.
Some 29% of tenants stated that they would actually like a tenancy to last significantly longer than three years, and 43% of the tenants questioned had spent more than five years in their current rental property.
MakeUrMove managing director, Alexandra Morris, said: “Many tenancy agreements are currently set at twelve months with six months break clause 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.”
