Britain’s biggest building society and leading buy to let lender is encouraging landlords to give tenants greater security by altering mortgage terms to allow three year leases.
Few lenders allow landlords to offer assured shorthold tenancy agreements of more than 12 months because of notice to quit rules.
For longer tenancies, this time increases, so tenants know that as long as they pay the rent and do not breach the terms of the lease, they can remain in their home.
Nationwide has made the change to reflect a switch from home ownership to private renting.
It’s likely the move will also signal other lenders to follow suit.
Landlords who want to offer longer tenancies find their access to mortgages is restricted even though the law says an assured shorthold tenancy can last up to five years.
In reality, the ability to offer a longer tenancy probably will not make much difference to landlords.
Nationwide are no doubt thinking of their brand and have little worry about evicting sitting tenants if they repossess a buy to let because they have crunched their numbers and judge the risk minimal to selling a home to reduce any mortgage debt.
Plenty of tenants have stayed in their rented home for up to four years – which is the average tenancy for 46% of renters, according to research by the National Landlord’s Association (NLA).
Chris Norris, head of Policy at the NLA, said: “According to the NLA’s tenant research, almost half of tenancies last in excess of four years, which suggests that the length of a current tenancy agreement serves tenants’ needs as well as providing the flexibility that many seek from the private rented sector.”
Homeless charities, like Shelter, claim shorter tenancy agreements fail to offer private tenants security.
They allege families with school-age children and retired tenants would like to know they are secure for as long as they need.