3-year tenancy:

There has been press speculation that the government is intent on introducing a mandatory 3-year residential tenancy, even before the ongoing consultation process on the major change is complete on the 26th of August.

Despite fears expressed by landlord groups that the move would be detrimental to the private rented sector (PRS), the Government’s intent appears to be there. A heavy clue lies in the consultation’s title: “Overcoming the barriers to longer tenancies in the private rented sector.”

Landlord groups have been warning that the Government should not make any decisions on longer term tenancies until the consultation process is complete and all interested parties have had their say. Landlords are urged to participate in the consultation process – see here

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Responding to reports in The Sun newspaper that a decision will be announced next week, the Residential Landlords Association (RLA) has warned that any such move would be a “huge breach of confidence in the democratic process”, given that the consultation on longer tenancies does not close until 26th August.

Landlord groups have said that they support longer tenancies in principle, but on a voluntary basis, not as a compulsory regime which means that they will be imposed as the norm.

One suggestion is that financial incentives such as tax relief would be the best way to ensure that landlords offer longer-term tenancies to those that want them and where landlords are willing to give them.

The proposed new tenancy regime would in effect remove the no-fault eviction process so valued by most buy-to-let landlords, known as section 21. It would be replaced with an adversarial court process (section 8) where the onus of proof of tenant default is placed on the landlord.

This section 8 process relies on 17 prescribed grounds for possession, meaning that possession is no longer assured when a tenancy goes wrong. The decision to award a possession order is most often at the discretion of a judge in what is often a long drawn out and expensive legal process. This would considerably increase the letting risk for landlords.

The RLA comments:

“The English Housing Survey shows that private sector tenants are, on average, living in their homes for almost 4 years increasing to 17 years for those aged 75 and above. So the longer tenancies demanded are already a reality for many.

“The RLA supports longer tenancies but making a three-year tenancy the default position by law would be complex as it requires trying to establish every possible scenario in which a tenant might not want such an agreement, such as students, and how that would work. The alternative, which we support, is the use of financial incentives.

“Any measures to encourage longer tenancies need to go hand in hand with reforms to improve and speed up the ability of landlords to regain possession of a property where a tenant is, for example, failing to pay their rent or committing anti-social behaviour. This includes the Government progressing with plans for a new housing court.”

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