Security of Tenure:

The government’s about face on long-term tenancies, from a voluntary longer-term tenancy to a 3-year mandatory one, will not go down at all well in most of the landlord community.

Although the plan is as yet at the consultation stage, and a tax sweetener is being suggested, a public consultation ending on the 26th of August has a title that is rather ominous: “Overcoming the barriers to longer tenancies in the private rented sector”. It would imply a confirmation of the government’s intent, rather than a genuine need to consult on people’s views.

The proposal is to introduce a mandatory minimum term of three-years for a private residential tenancy. This would drive a coach and horses through the principle of shorthold, which for 30 years has allowed landlords to get their properties back without too much hassle when things go horribly wrong. Even then, it can easily take up to 9 months to repossess under the current rules, using section 21.

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The new proposal would bring in a tenancy where there is a six months probationary period, at which point the landlord could bring the tenancy to an end if all is not well. But if this becomes law, when this 6 month hurdle is passed, the landlord is tied-in for the duration – for the remaining two and a half years, whatever happens next. During this period though, the tenant can walk away with just a short period of notice.

It would be a major transition away from the current shorthold tenancy where the landlord can use the section 21 no fault eviction process after the initial 6 months, providing the fixed term has expired. Basically, under the current rules, it means the landlord has a degree of control and protection, should things go wrong.

Relying on section 8, which would be the case with the long-term tenancy, the onus falls on the landlord to prove that a tenant is in default, in a court of law – unlike with section 21 a court hearing is mandatory.

Given the current state of the justice system, with court closures up and down the country, section 8 can be a long drawn-out and expensive process. It offers a largely discretionary eviction process where there’s no certainty of possession, unlike the section 21 accelerated route which is a mandatory paper based process; one that’s been largely responsible for the growth of the private rented sector.

Yet again it would seem that the government is caving in to media pressure and political reality, that is, a large cohort of tenants now representing a huge voting block, one which will greatly concern the Conservatives when election time comes around.

The private rented market has grown geometrically through the diligence and hard work of many thousands of small-scale landlords investing their money into a sector. This was because the sector offered better returns than other asset classes and savings routes. In the process these landlords have provided much needed accommodation for those unable to afford to get themselves onto the housing ladder.

For several years now governments have provided nothing but discouragement for the small-scale landlord, while at the same time feigning gratitude for what they do. Through multifarious legislative measures, including the introduction of successive rounds of new safety and tenancy regulations, restrictions on mortgage interest relief, and a stamp duty surcharge for second homes, the government has clobbered the landlord.

When landlords wake up to the full implications of these latest proposals on longer tenancies, some experts in the industry think this could be the final straw for many. They will not be at all surprised to see many more landlords selling-up and leaving the sector altogether, with the effect that rents will increase as fewer houses are available for renting.

Have your say – Open Consultation until 26th of August – Overcoming the Barriers to Longer Tenancies in the Private Rented Sector – have your say here

©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.

3 COMMENTS

  1. This proposal might in the end not bad at all for Landlords’, although I would press for eight to nine months probationary period. Nevertheless, a stable rental income is good for landlords especially if it’s long term. Even if there’s a need for an eviction of tenant, in my opinion it will still take the same amount of time it takes under the current rules. Finding a good Tenants’ who takes care of rented property and who pays their rent as and when due by date, is the main thing here and therefore I will suggest that Landlords’ should ask Tenants’ to produce a minimum of three to five years Tenancy reference of previous residence. The new proposal could work out better for both Landlords’ and Tenants’. There will be no need for getting the property ready (carrying out maintenance albeit small fixes) at the end of say six or twelve months of the Tenancy agreement, and furthermore it will cut loss of income for Landlords during transition of the new tenants’ moving in. Landlords can also put system in place such as mid-term inventory inspection of every six months as a safeguard to ensure that Tenants’ are not inflicting damage to the property.
    Conversely, Landlords’ should ensure that they fulfil their part of the tenancy agreement. Failing to do so can trigger resentment towards them, from the tenants’. Repairing and fixing faulty fixtures, fittings, appliances etc are necessary for tenants to enjoy their occupancy of property and in fact forms part of Landlords’ and Tenants’ right in the agreement clause. When the tenants’ feels that the Landlord is not bordered to fix their own property then TLC of the fabrics of property is thrown out of window and in some cases, they withhold part of rent and subsequently might lead to dispute which can be a headache for both parties.
    My conclusion is that Landlords’ should not fret about the new proposal but rather be open minded about it because it could be a good thing. I hope that the governments consultation process will include Landlords’ representatives.

    Victor
    vcapropertyinspection.couk

  2. Can they not see this will seriously reduce the number of properties available and that is will be detrimental to the economy.

  3. I think the last paragraph has said what most small landlords think. The reason that there are so many small landlords is that the renting is a way of topping up their inadequate pension. I can see that many small landlords will sell their properties in England and re-invest in the overseas market. That would make the housing problem even worse.

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