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Buy-to-let landlords to offer ‘family friendly’ tenancies

paulajohn
Written By:
paulajohn
Posted:
Updated:
02/10/2013

Communities secretary Eric Pickles has announced rules to help tenants get longer contracts.

Speaking at the Tory conference yesterday, Pickles said the new rules would oblige buy-to-let landlords in the private rented sector to offer longer tenancies that are standard at present.

He said the aim is to give renters more security and cut unfair charges and letting fees.

“The last thing we want to do is hurt hard-working tenants by increasing costs and strangling the sector with red tape,” Pickles is expected to tell the Conservative party conference. “But families deserve stability for their children. Today’s proposals will raise the quality and choice of rental accommodation, root out the cowboys and rogue operators in the sector, and give tenants the confidence to request longer fixed-term family-friendly tenancies.”

At present the majority of tenancy agreements are between six and 12 months, with many buy-to-let lenders unwilling to lend to landlords who wish to let for longer periods. However, Nationwide eased its own criteria earlier this year by allowing buy-to-let landlords to sign three-year contracts with tenants.

George Spencer, chief executive officer of online lettings company Rentify, said:

“With more people both choosing and having to rent for longer, one of the problems with the letting industry has been the tendency towards short tenancies. This gives tenants very little security and can be particularly tricky if you need certainty, perhaps because you are raising children in rented accommodation, for example, and regular chopping and changing doesn’t work with nursery or school places.

“But actually landlords tend to prefer long-term tenants because this is far less hassle than settling in a new tenant every six or 12 months and showing them where everything is. The other danger of frequently changing tenants is void periods where the landlord is inbetween tenancies and has to cover the mortgage themselves. This can have a significant impact on profits. Tenants renting via Rentify on average stay in their properties for 20 months.

“Landlords must be prepared to offer longer contracts of two or three years rather than 12 months, giving tenants the security of tenure many crave. Many landlords assume that a term of a year is standard but this is not the case.

“Even lenders are changing their tune: many have traditionally insisted that the property is let under an Assured Shorthold Tenancy for six or 12 months but The Mortgage Works (part of Nationwide Building Society) recently changed its rules so that buy-to-let borrowers can offer tenancies of up to three years. This is long overdue and we expect other lenders to follow suit.

“We have long supported greater transparency on lettings agents’ fees but it is important that the government ensures there is redress for tenants where this is not the case.”


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