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Phil Brown

3-year mandatory tenancies - Another blow for landlords?

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The government is about to put forward another new law that will once again make them very unpopular with landlords. 

There are currently plans being put forward (currently at the consultation stage) to introduce mandatory 3-year tenancies for all tenants within the private residential sector. 

 

What this means: Landlords
- Longer tenancy agreements would mean a longer period of time for eviction of troublesome tenants. 


- With this in mind, under the new proposal, there would be a 6-month probationary period where the landlord can request termination of the tenancy agreement and regain the property. 


- Currently, a landlord can serve a section 21 after the probationary period has ended on the property (usually 6 months) and get their property back without giving any reason or going to court. 
However, with a longer tenancy, there would be a longer initial period whereby a section 21 could not be served, meaning a section 8 would need to be served. A section 8 has a lot more technicalities and does have to go through the court system. 


What this means: Tenants
- Good tenants would be guaranteed more stability from their rented property in the long term. 


- Once the 6-month probationary period is up, the tenant is secure within the property for another two and a half years. If however, they want to leave, they can simply cancel the contract, giving a short notice period. 

 


Do you think longer tenancies are a good or bad idea?

 

Original source: https://bit.ly/2OPz0Sx


 

 

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I'm not yet invested in my first property yet but I would say from the outset this idea is different, but it could be a good thing. Bad Tennant's are a pain in the rear in all situations however knowing people who do rent. The mind set would be if the contract is 3 years then they will stay the length in order to save their own deposit for example. This potentially gives more stability to landlords.

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Guest Bob

I see some possible consequences of this:

 

1) more BTL landlords will exit the market.  Not necessarily a bad thing if the government picks up the slack with social housing (as if).  

 

2) landlords will increase the amount of deposit required which will be forfeited if tenants terminate before the 3 years is up. It’s not right that the tenant gets the security of a 3 year tenancy but at the same time can terminate the tenancy at short notice at the inconvenience of the landlord. 

 

3) tenants may find it more difficult to find a place as landlords become more picky with who they will rent to. 

 

4) rents will increase if supply reduces due to landlords leaving, and/or turnover of tenants reducing due to longer tenancies. 

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Guest Greenbass

What a ridiculous idea again by the clueless in Government. Surely that’s recriminating against landlords? If one of my tenants wants a longer tenancy and the mortgage company agrees I’m all for it, however the tendancy term needs to be tied in for the tenant too, other wise the landlords are being descrimnated against. What it doesn’t allow for is what happens when a landlord needs to sell a property? They will be limited to selling with a sitting tenant and other investors and potential buyers. Once again not thought through enough by the government. I for one would definitely be asking for a big deposit to cover myself and any only the best tenants would be considered which will make it more difficult for those with limited cash/income

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Guest Lisa B

I often offer tenants two year contracts with a one year break clause, because it offers me and the tenant greater stability. I usually also offer up to three years of rent stability on the basis that they rent they are paying when they move in is at the higher end of the market value and so it would be reasonable to review after three years. I think making it a mandatory three year contract is not in the interest of either the tenant or the landlord as often one of the great benefits of renting is that the tenants are able to move from one place to another without huge restrictions.

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I guess its good. If you get a bad tenant then its going to be one hell of a nightmare and similarly the other way around.

 

Its the risk of the game I guess. But they guarantee for landlord is three years income and for the tenant its a stable home for three years and gives them a better chance to organise their finances and potentially buy their own property.

 

 

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Not all tenants would want 3 years minimum commitment, some are bound to like shorter tenancies as they might be on a temporary contract in the area or renting for a short period due to a major life change such as relocation / divorce or whatever. Should they be forced on to a 3 year tenancy? I say not. They may be more incentivised to buy if this becomes the requirement, which could drive up demand and prices and would be counter to the presumed aim.

I get that a longer contract could give tenants the security against a S21 eviction which families for example might appreciate.

Perhaps a better change would be to give tenants the option of opting for a 3 year tenancy but with the option for the landlord to decline this in certain circumstances, for example the intention to sell earlier than this to close the mortgage or because the landlord is living abroad / another part of the country for a fixed period after which they wish to take possession back for their own residence.

I have families who rent for me that started on a 12 month AST 5 years ago which has then just rolled into a monthly AST. They've never asked to renew it. They get their confidence we won't S21 them from being told by us that we have no plans to sell up or evict them. Its a relationship that builds trust.

From my point of view as a landlord, I want good tenants that stay a long time. If they are non payers or damaging the property or breaching the contract then regardless of how long the AST is I will be going for eviction. As far as I know nobody is advocating the removal of the right to remove for breaches. If on the other hand I have other no blame reasons why I need to evict the tenants, for example selling up or taking up residence in the property myself then this is something I would just work into my long term plan.

S

 

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