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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Longer Tenancies Consultation

Richard Blanco, an experienced landlord and property developer who is also the NLA representative for London, comments

The government has issued a consultation called ‘Overcoming the Barriers to Longer Tenancies in the Private Rented Sector’ and to the surprise of many has proposed a minimum three-year mandatory tenancy.  This has been a core campaign for Shelter and was adopted as Labour Party policy in Ed Miliband’s 2015 election manifesto, but has not previously been put forward by the Conservatives.

The key argument for three-year tenancies is that the size of the private rented sector (PRS) has increased from 9% to 20% of housing since the introduction of the ‘no fault’ eviction process and six month assured shorthold tenancies in 1989. Some 38% of households in the PRS are families with children who understandably prefer stability and security of tenure and who benefit from continuity of health and education services for their families. Advocates of three-year tenancies argue that families are often forced to move after six or twelve months as some landlords increase rents or simply evict tenants with ‘no fault’ section 21 notices. The consultation suggests this is happening because tenants complain about repairs, yet there is specific legislation now to protect tenants from so called ‘retaliatory eviction.’ Campaigners point to more stable private rented sectors in other EU countries and say that this creates a more stable society. BBC Radio 4’s Moneybox programme recently cited Holland where tenants are granted nine-year tenancies.

In this article I want to examine each of these arguments that campaigners rely on. Firstly, the assumption that because tenancies are currently six or twelve months in length, most tenants are having to move every six or twelve months. The latest English Housing Survey tells us that the average tenancy lasts 3.9 years. Landlords logically want good tenants to stay as long as possible and most only raise rents when there is a change of tenants. That means that many long term tenants are paying below the market rent. Over the long term, rents rise less than inflation. Rent increases have hit the headlines over the past few years because wages have grown less than inflation and so the cost of living has become greater for tenants. Rents in Greater London fell by 0.2% in the 12 months to May according to the Office of National Statistics.

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