Longer Term Tenancies:
Ahead of the government’s stated intention to introduce voluntary longer short-term tenancies, Santander has extended its assured shorthold tenancy (AST) lending policy from 12 months to 36 months.
This means that landlords with a mortgage from Santander will be in a position to offer longer assured shorthold tenancy agreements with their tenants if they want to do so.
Surveys have shown that the majority of AST tenants don’t want longer term tenancies, as they prefer flexibility in case they need to move with employment etc. However, with an increase in the number of families renting, they prefer stability, particularly if they have children in schools locally.
It is likely that with the introduction of a longer term tenancy (which will be voluntary between the parties) there will be a restriction on rent increases, perhaps annually, or the full term, but they will be off-set by increased certainty that the tenant will stay for longer, reducing void periods.
Miguel Sard (pictured), director of mortgages at Santander, told Mortgage Introducer:
“In areas such as London and the South East, property prices continue to rise and outpace wage growth significantly.
“Many renters aspire to take a step on the property ladder, but are resigned to ploughing their money in to rent, unable to save for a deposit.
“We hope these changes in [lending] policy will go some way to helping people budget and potentially save towards a deposit for their own property, supporting the first time buyer market and enabling social mobility, while also helping to prevent the risk of homelessness.
“Meanwhile, it also ensures landlords have a guaranteed rental income and don’t have to worry about loss of income with an empty property.”
This could be the start of a trend with BTL mortgage lenders offering longer term tenancy loans.