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Mandatory Three-Year Tenancies Could Deter a Third of Landlords
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Almost one third of landlords (32%) say that they would be less likely to invest in new rental properties if the Government were to introduce mandatory three-year tenancies in the private rental sector, according to Paragon’s latest PRS Trends report, which is based on interviews with 200 landlords during the third quarter of the year.
These findings arrive as the Residential Landlords Association calls on the Government to support longer-term tenancies.
Paragon surveyed landlords on the issue to gain a deeper understanding of their views, following the Government’s recent consultation, titled Overcoming the barriers to longer tenancies in the PRS.
Asked if the introduction of mandatory three-year tenancies would make them more or less likely to consider certain tenant types, the highest proportion of landlords said that they would be more likely to consider letting to older couples (36%), retired people (29%), families (25%), and older singles (25%).
Interestingly, landlords felt that compulsory three-year tenancies could potentially make them less likely to consider more mobile and itinerant groups, including students (45%), migrant workers (40%), and young singles (24%).
Paragon has consistently supported greater security for tenants who desire it, and was one of the first lenders to update its mortgage conditions to facilitate longer-term tenancies back in 2014.
Working through the then Council of Mortgage Lenders (now UK Finance) to coordinate action across the lender community, significant change was achieved and, today, many of the biggest lenders in the buy-to-let sector support landlords offering tenancies of up to three years in duration.
John Heron, the Director of Mortgages at Paragon, says: “Landlords are highlighting that the diversity of the tenant population calls for a diversity of tenancy arrangements. While some groups value greater security, many other tenants favour flexibility. Young professionals, for example, value the flexibility that the private rental sector brings to move to different areas and to different types or property.
“In light of these findings, rather than impose longer-term tenancies as the primary or default arrangement in law, it may be preferable to bolster tenants’ rights to choose from a range of different tenancy lengths, and boost incentives to landlords to enter long-term arrangements where requested.”
Last month, reports claimed that the Government has scrapped its plans to introduce mandatory three-year tenancies.
With the Autumn Budget coming up, however, we may see a return of these plans to Government agenda. We will continue to keep you up to date with all developments on lettings law at LandlordNews.co.uk.
