Buy-to-let industry questions need for longer-term tenancies

by: Edward Murray
  • 06/12/2016
  • 0
Buy-to-let industry questions need for longer-term tenancies
Market practitioners have questioned whether there is a need to encourage landlords to offer longer-term tenancy agreements and rent guarantees, following a question raised by Meg Hillier, chair of the Public Accounts Committee and MP for Hackney South and Shoreditch.

In a question directed at the chief secretary to the Treasury David Gauke, Hillier asked: “More people in my constituency rent privately than own their own homes and for most of them ownership is a distant or impossible dream. Are the government considering looking at the supply of private rented housing on longer tenures, perhaps with rent guarantees, and possibly using tax reliefs or other mechanisms the Treasury has in its armoury, to encourage landlords to provide those longer term tenancies and better security for the many private rented sector tenants?”

However, David Lawrenson (pictured), founder of landlord advice website, said: “I think only about 6% of tenancies are ended by the landlord and so I wonder if there is even a need for it.”

Lawrenson also pointed out that the creation of longer tenancy agreements would need to be agreed with lenders. He said: “The number one issue is that the majority of lenders will not allow landlords to let properties for longer than a 12-month tenancy and so there would need to be a discussion with lenders.”

He raised the point that longer tenancies may also encourage lenders to tighten criteria, creating a potential funding issue for landlords.

Considering other hurdles to overcome, Lawrenson believed the market would need to create clear guidelines on how landlords could remove anti-social tenants or those who fell into arrears, if they had signed longer tenancy agreements.

He said: “Under the law at the minute, if you have got someone who is just paying the rent – if they have a three-year tenancy the only way to be rid of them within that period is if they go more than two months in arrears. Then it will take up to five or six months before you manage to recover the property and there is no rent during that period. It is a quid pro quo. There has to be a faster recovery procedure than there is at the moment.”

In response to Hillier’s question, Gauke did not commit to any government action, but agreed that “there is a need for flexibility in terms of tenure”.

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