The buy-to-let arm of Nationwide Building Society is to become the first mainstream lender to allow its borrowers to offer their tenants the option of contracts which run for up to three years, rather than a maximum of 12 months, which is the industry standard.

The lender believes that enabling landlords to offer this choice will provide more stability to tenants.

Henry Jordan, TMW’s managing director, said:

“The private rental sector has grown and changed phenomenally over the last few years, with rising numbers of families looking to rent in particular. We want our buy to let customers to be in a position to be able to meet the changing needs of the market. According to Shelter, one in five families now rent rather than own. Families are more likely to want longer term tenancies to, for example, ensure continuity of schools, so giving our customers this option will bring greater stability to this growing market segment.”

Campbell Robb, Shelter’s CEO, said:

“This news is very welcome recognition that six or twelve month tenancies just aren’t working for England’s nine million renters. More and more families are now renting their homes, but all too often short tenancies mean changing schools, leaving friends behind and growing up with constant upheaval.

“With two-thirds of renters saying they would like the option of staying in their home long-term, it’s encouraging that Nationwide is leading the mortgage industry to help make renting more stable. We look forward to other mortgage lenders following suit.”

In February, TMW was the first mainstram lender to change its criteria in order to allow landlords to rent to tenants in receipt of housing benefit.