The Government has issued a consultation paper in relation to proposals to force landlords to give tenants 3 year minimum rental agreements.
Around 80% of tenants sign a 6 or 12 month rental contracts with landlords. The proposal is to extend this to 3 years but to allow tenants to leave earlier after a minimum period. The idea is to provide tenants with greater security, particularly for families who might have to move their children to a different school if a landlord required them to move after just 6 or 12 months.
Studies show that 40% of tenants would welcome the idea although another 40% are against the proposal. Many of these may be students who would struggle to agree a 3 year tenancy. The consultation will consider some exemptions in particular for the student community.
Landlords have reacted angrily to the proposals, labelling them as vote grabbing. The National Landlords Association sited concerns over mortgage providers who may not like longer tenancy agreements. The boom in buy-to-let properties was spawned by the introduction of Shorthold Tenancy Agreements with banks comfortable with being able to kick out a tenant after 12 months if a landlord stopped paying the mortgage. Banks might not be so happy to have to wait for 3 years before repossessing a property and so may not lend to landlords in future.
This is an important issue. Over 46% of 25 to 34 year olds now live rented accommodation, up from 27% in 2007. In London, more than half of all homes are now rented.
Watch this space…..