The aims and objectives make a lot of sense as families with children of school age need some certainty around housing to ensure that the education of their children does not suffer as a result of frequent moves.
Buy-to-let landlords can serve two month notice to vacate a property, through no fault on the part of the tenant, once an initial six month period has elapsed. Clearly this alarms tenants as they have no surety of tenure.
However, most landlords would be in breach of their buy-to-let mortgage conditions if they were to offer a tenancy beyond an initial term of six months to a year. Some lenders are looking for every possible reason to call in loans as their losses have already been underwritten by the taxpayer.
Therefore, recovery of just 50% of the outstanding mortgage debt in the event of a forced sale could still result in huge profits for the lenders. It makes sense for these lenders to find an excuse to call in loans.
However, a solution called the Deed of Assurance could be the answer. The deed enables buy-to-let landlords to provide some certainty and commitment to long term tenants without affecting mortgage terms.
In my case, I charge a small premium to tenants who want a Deed of Assurance and there are plenty of tenants prepared to pay. In return I give an undertaking to pay compensation if I serve notice on the tenants to leave within an agreed timescale.
Obviously the compensation is not payable in the event of the tenant having defaulted on the tenancy agreement conditions.
It works incredibly well for me as good, long term tenants are what I am ideally looking for anyway as frequent turnover of tenants is expensive in terms of re-decoration and re-letting costs.
Mark Alexander is founder of property118.com
