Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

That’s the view of easyProperty CEO, Rob Ellice, writing for property industry journal Property Week, where he argues strongly against Labour’s longer tenancies proposals.

Ellis says that unless some sort of flexible exemptions are incorporated into Labour’s proposals for the private-rented sector (PRS), “it is difficult to see how a longer minimum tenancy requirement would work with landlords as well as benefiting many tenant demographics.”

Labour are proposing a standard tenancy minimum length of 3 years (the Greens have said 5 years), but this is at odds with current buy-to-let mortgage rules, most of which contain restrictions on tenancy lengths to 12 months.

Ellis thinks that Labour’s proposals will ward off buy-to-let investment and lead to a restriction of housing supply, and inevitably an increase in rents.

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The measure would likely put off small or accidental landlords from letting if they are wanting a temporary let because of a short-term job move or posting abroad, for example.

Also, many tenants don’t want such a commitment as they like the freedom and flexibility to move locations with job changes.

According to Ellis, the average UK tenancy is 19 months, while students, a large proportion of the rental market, have an average tenancy agreement of just nine months. How then, he asks, are such restrictive requirements likely to be of benefit?

The main beneficiaries will be tenants renting with families, those families who would have traditionally been housed in the social sector, and likely the demographic Labour have in mind with these proposed legislative changes. But it seems they have failed to consider the needs of the other 90% or so of the people in the private renting market when they contemplate such a change.

Ellis says:

“We don’t need more restrictive regulation for landlords, including licensing and rental caps, which are only likely to suffocate the private investment the capital’s PRS desperately needs to support its residents.

“Flexibility is the key to the success of the PRS market and rent controls are inflexible. The introduction of these would restrict both landlord and tenant choice, only deterring the investment into the PRS that we need to support generations of renters.”

Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

2 COMMENTS

  1. I must say I completely disagree. The offer of a tenancy of up to three or five years\’ duration would help tenants in dropping roots where they live, feeling secure and part of a community. From the landlords\’ perspective to have tenants in place for a longer duration is good news as voids and re-letting costs eat into the typical annual return, to say nothing of the costs of refreshing between lets. So long as the landlord is entitled to gain possession quickly in the event of non payment of rent I see no reason to oppose longer letting agreements. Rent controls and the like tend to be disastrous for the vitality of the sector as landlords are forced to exit. Combine rent control, greater rights for tenants, and the surge in interest rates which, some day, will come and you have the perfect storm for highly or even moderately geared landlords….. Those of us who remember the \’91 crash have seen it all before

  2. If interest rates go up or the lenders mortgage is a year or two away from maturing, the landlord will risk bankruptcy. You cannot lock a business into three year stranglehold.

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