Thu 10 Aug 2017 View all news articles
So, you’ve secured a tenant for your property, now you have to decide, ‘do I go for short term or for a long term tenancy?’
For either a Landlord whom takes total control or one who employs an agent, let’s assume we are working with the most commonly used contract, an assured shorthold tenancy, or AST for short.
A report carried out by Kent Reliance banking services, found that there are more people than ever before in private rented accommodation. They also discovered that the sector grew to 5.5 million households in the first quarter of this year! Perhaps this doesn’t come as a surprise, though amidst these unprecedented levels, the concern of how the sector is serving tenants has come up again, notably focusing on the length of tenancy agreements available to tenants.
As a sector, we are hooked on short term tenancies, which is understandable from a Landlord’s perspective, it gives them the flexibility they require, which is also a positive for tenants too. The Office of National Statistics state that only 11% of tenancies are 18 months or longer. But with the rental market so buoyant, for instance at Karl Tatler we currently have 8 times more Wirral registered, active applicants looking than we have Wirral based properties. And with no signs of this ratio experiencing any correction in parity, now might be a good idea to remember that for most tenants, long term rentals and agreements feature high on their ‘checklist’. Particularly as the Citizens Advice found that nearly 40% of private renters would like long-term tenancies.
And it is these types of statistics combined with the extreme growth in the buy-to-let industry that has made the government stand up and take notice. For instance, both the Labour and Conservative parties have expressed desire to give private tenants greater security and longevity. Tabling the concept of imposing minimum tenancy periods, though personally I doubt such regulation will be introduced, certainly within the foreseeable.
So what would be the consequences of long term tenancies? initially on face value they would seem to favour the tenants, giving the security so many crave. But from the landlord’s view, consider the prospect of reduced tenant turnover, reduced void periods, that can hit the pockets hard, redecorating between tenancies and perhaps even a more regular income stream would decrease the risk of mortgage arrears?
Nevertheless, for all the benefits, there will be an equal number of negatives. Landlords would not be able to frequently review the rent, which may cause higher rental prices from the offset. Counteracting the intention of longer tenancies designed to reduce frequent rent rises. Correspondingly, would long term tenancies also make landlords even more stern on their restrictions with tenants from the offset, knowing they won’t be able to make swift changes?
In essence, as an undecided landlord take guidance from your agent, the request for short or long term will even come in from the would-be tenant, but ultimately the ball is firmly in the Landlord’s court. My advice would be for new tenants entering, and certainly first time landlords to proceed with caution, and opt for 6 months. Once you feel more comfortable and know more about your tenant and your long term plans, a longer tenancy may be the preferred option.
As leading Wirral estate agents and lettings agents we have plenty to talk about and like to give our opinions on a few things too! Read about what we have to say, our latest news and industry news.