The Benefit of Short Tenancies

Many renters could benefit from short-term leases, rather than the three-year tenancy agreements being suggested by Labour, rental groups, and some charities, says Cluttons.

The Benefit of Short Tenancies

Cluttons’ research director, Sue Foxley, has analysed the situation, and her study shows that even in central London, it may have been an advantage for renters to be able to regularly review their rents.

The Benefit of Short Tenancies

The rental market is quick to adjust to a weak employment market and falling incomes. This is evident during times of financial stress,” explains Foxley.

For example, Foxley has data to prove that standard central London rents fell significantly during 2003-4, and again throughout 2009 and 2010, as local economic conditions deteriorated.

Foxley says: “During these periods, tenants, even in outperforming central London rental market, would have been better off opting for rental reviews.”

According to Foxley, it is a mistake to limit rents or fix tenancies for longer periods for investors and landlords, as well.

Foxley states: “The residential sector is popular amongst life and pension funds, not just because of the superior returns it has recorded over the long term, but also because of it’s liability matching qualities.

“The fact that rents are highly correlated with incomes appeals to both tenants and the very investors that governments of all flavours wish to attract.”¹

¹ http://www.landlordtoday.co.uk/news_features/Renters-may-benefit-from-short-tenancies