Minimum three year contract proposals spark anger
Government proposals that will give tenants a minimum three year contract – but allow them to walk away earlier if they wish – have provoked fury from landlords.
The longer tenancies, proposed by the housing, communities and local government secretary, James Brokenshire, in a consultation paper to be published this week, would prevent landlords evicting tenants at short notice.
About 80 per cent of tenancies in England and Wales are set at six months or 12 months, with the assured shorthold tenancy underpinning the buy-to-let industry.
The consultation will examine whether there should be exemptions from the three-year rule for student accommodation.
Mr Brokenshire said: “It is deeply unfair when renters are forced to uproot their lives or find new schools for their children at short notice due to the terms of their rental contract.
“Being able to call your rental property your home is vital to putting down roots and building stronger communities. That’s why I am determined to act, bringing in longer tenancies which will bring benefits to tenants and landlords alike.”
Under the proposed longer-term agreement, tenants would be able to leave before the end of the minimum term, but would have greater protection if they wanted to stay in a property for an extended period of time.
But the National Landlords Association (NLA ) said only four out of 10 tenants actually want longer contracts.
Richard Lambert, chief executive of the NLA, said: “This is a policy which the Conservatives derided when it was put forward by their opponents in the past two general election campaigns.
“It’s hard not to see this as more of a political move aimed at the renter vote than a genuine effort to improve how the rented market works for all those involved.”
NLA research with tenants found that 40 per cent of tenants want longer tenancies, but 40 per cent do not. More than 50 per cent said they are happy with the tenancy length they were offered, and 20 per cent told the NLA that when they asked for a longer tenancy, they got it.
The shadow housing secretary, John Healey, said: “Any fresh help for renters is welcome, but this latest promise is meaningless if landlords can still force tenants out by hiking up the rent.
“That’s why Labour’s new rights for renters includes controls on rents as well as an end to no-fault evictions and protection against substandard rented homes.”
The proposals could have a dramatic impact on the buy-to-let industry, which mushroomed after the introduction of the assured shorthold tenancy.
The six-month and one-year contracts gave lenders the confidence to grant mortgages against properties where they knew they could repossess the property at short notice if necessary.
But a three-year term is likely to make lenders wary about granting loans, or they may increase the interest rate to reflect the additional risk.
The proposals on long-term tenancies will form the key part of an eight-week consultation.
“The three-year model is one of a range of options and the consultation seeks views on longer minimum tenancies, which are used in other countries, as well as ideas on how to implement the model agreement,” the government said.
Indeed, in some quarters longer tenancies are seen as an opportunity for landlords to get better financial security.
At the beginning of the year, for instance, Santander said that both landlords and tenants would benefit from the AST extensions.