The government has launched a consultation on “Overcoming the barriers to longer tenancies in the Private Rented Sector.” The consultation will close on 26th August 2018 and only applies to England at present.
The objective of the consultation appears to be to seek views on new models of tenancy agreement which balance a tenant’s need for protection, with the landlords need to regain their property when their circumstances change.
The consultation document states that at present 81% of tenancies granted are for an initial fixed term of 6 or 12 months. These short tenancies can result in some tenants feeling insecure and that their house is not their home. Many tenants also feel disempowered to challenge poor property standards and are unable to plan for the future. On the flip side the benefits for a landlord are that empty properties do not generate an income and finding new tenants can be costly. Furthermore, it is stated that tenants who have longer tenancies are more likely to be proactive when looking after the property and may contribute to the local community.
However, longer tenancies can make it difficult for landlords to recover their properties whenever the need arises. But the consultation is conscious of balancing the needs of a tenant with security and ensuring that a landlord can recover possession. Accordingly, the Ministry of Housing, Communities & Local Government do not wish to discourage landlord investment within the sector and are keen to ensure that any proposals to provide tenants with greater security do not impact on the supply of good quality rental properties.
With all the above in mind the consultation is now seeking views on tenancies with the following model tenancy agreement:
- A minimum 3-year tenancy with a mutual 6-month break clause;
- Following the 6-month break clause the tenant may still end the tenancy by providing the landlord with a 2 month notice in writing;
- Landlords can recover the property during the fixed term on Section 8 grounds. Additionally, should the landlord wish to sell their property they will also be able to recover the property;
- Rents can be increased by mutual agreement once a year subject to the landlord making clear how rents will increase when advertising the property for rent; and
- Exemptions can be put in place for tenancies which cannot realistically last for 3 years such as student accommodation.
On paper the model seems like it may have some appeal, especially in light of all the proposed and current changes in the Private Rental Sector. However, landlords and agents are likely to be concerned about the effectiveness of the court process in recovering possession using a section 8 notice. However, this is only the initial stages of a long consultation process, so updates will be posted as and when released.