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Steve Harriott: Are longer term contractual tenancies the way forward?

RLA
Written by RLA

Over recent months there seems to have developed a growing interest in the idea of requiring landlords to offer longer tenancies in the private rented sector. Steve Harriott, CEO for Tenancy Deposit Scheme, discusses…

Over recent months there seems to have developed a growing interest in the idea of requiring landlords to offer longer tenancies in the private rented sector. Steve Harriott (above), CEO for Tenancy Deposit Scheme, discusses…

Proposals by Shelter argue for a new fixed-term, five-year to be introduced for all tenancies in the private rented sector, with rent increases linked to inflation and tenants able to leave the contract at any point with two months’ notice for no apparent reason.

This proposal however seems to be somewhat one sided as the landlord will only have a limited number of grounds under which the tenancy might be ended early.  The Residential Landlords’ Association, with which TDS works closely on tenancy deposit matters, has launched a consultation on its own proposal for a longer term tenancy for the private rented sector.

The RLA’s proposed survey of over 100,000 landlords is designed to establish their thoughts on longer term tenancies to establish a model that is fair to both the tenant and landlord.  In addition, the RLA is in discussion with the Council of Mortgage Lenders to overcome the concerns that many mortgage lenders have as regards to tenancy agreements that diminish a landlord’s right to fairly reclaim their property.

The proposal envisages landlords offering a longer term tenancy by agreeing that the tenant can renew for successive fixed term periods (such as a year or six months at a time) up to an agreed maximum of say five years. Crucially the tenant would have the right to opt for a new fixed term tenancy at the end of each current period of the tenancy and the landlord could only object if there was good reason to do so.

In the event of a landlord refusing to agree to an extension then the RLA is proposing that a form of Alternative Dispute Resolution is offered to resolve a dispute about a new fixed term being offered.  The Dispute Service is working with the RLA on the detail of how such as ADR service would operate and be funded.

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RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

8 Comments

  • I will only offer 6 month agreements on the basis if the tenant is bad I can get rid of them. Shelter cannot get their head around the fact that there are bad tenants. I see no reason why a landlord would wish to get rid of a good tenant who looked after the property, caused no difficulties to neighbours and paid their rent on time. I had one tenant who was wonderful and highly responsible. She stayed with me for around 7 years and even suggested rent increases! Does this perhaps say something about why Shelter feel the need to campaign the way it does?

  • What is required is a local arbitration system to decide on disputes between landlords and tenants that takes the court-based legal system with all its delays and openness to abuse by so-called homeless charities out of the picture completely. Currently the system can take 5 or 6 months to evict a non-paying or antisocial tenant, which means that a landlord has lost half of their annual income and decent people have been denied a home that they would have paid for and looked after.
    A local arbiter with powers to evict quickly or compel landlords to act quickly or penalise them where they have been at fault is what is needed, not a creaking county court system.

  • The term of lease/contract would be termed as ‘unfair’ as a contract has to be fair to both parties, ie break clauses or 2 months notice should be for both parties, plus the reason of an AST is to give back to the landlord the control he should have over his lettings. Shelter is part of the bureaucracy that really makes things more difficult for all concerned. A good landlord will keep his clients regardless off diktats, a bad one will not heed and still be around whatever or however the law and rulings change. At the moment a lease [AST] normally is for an initial 6 months then ongoing with a notice of 1 month from the tenant and 2 from the landlord. This is more than adequate in a fluid market such as this, previous legislation all but killed off the rental market, something which should always be born in mind.

  • With the uncertain economic future there may be many reasons why landlords may not want or be able to tie up the property for 5 years. What about those which are rented because they cant be sold? Lots of things can change for landlords apart from the need to make sure you have the type of tenant that you want to keep for 5 years. As has been said, some tenants are not what you want. If you have trouble collecting rent, five years can make the difference between carrying on and going bust.
    I think draconian measures like this are far too one sided and may have the effect of lessening the number of rental properties in the private sector.

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