Ahead of the Annual Budget on Monday 29th October, the Residential Landlords Association (RLA) has submitted proposals calling for tax reliefs for landlords to encourage and support them to offer an increase in longer tenancies. The suggested tax cut would be on rental income, which could increase each year a tenancy continues, up to a maximum of five years if the tenancy is renewed. The relief would then remain at this level.
Research suggests the majority of landlords would support this under certain conditions. PEARL, the RLA’s research lab established in August 2017, found that 73% of landlords would offer longer-term tenancies if they had assurances of financial incentives as well as court reforms. The changes would ensure that during a longer tenancy, they can promptly regain possession in cases such as tenants failing to pay their rent or committing anti-social behaviour.
The Suitability of Short Term
Does that research reflect most of the private rented sector? There are types of tenant within the PRS that might not want to be tied to a three-year tenancy agreement. These could be students or young professionals, moving for work temporarily. Some landlords prefer shorter tenancies too because of previous bad experiences with tenants and the ability to regain possession quickly if needed. According to data from the Ministry of Justice it can take 22 weeks on average from claim to repossession, meaning that landlords can be left with significant financial issues if the tenant is in rent arrears.
The Government is currently consulting on the barriers to longer-term tenancies with a proposed three-year tenancy model for all tenancies. This is just one of the options coming out of the consultation they launched in July 2018 to address the demand for longer tenancies from the growing numbers of families and older people in the private rented market. Would these changes benefit both landlords and tenants, or could this put off landlords from continued investment?
Listening to All Sides of the Sector
Mr Brown has been a landlord for several years and has reacted to the new proposals. He said, “In my experience most tenants do not want to be tied to a year tenancy, similar to landlords. They like the flexibility of being able to move on when they want to.”
Initially, he’s had tenants saying they wanted the property for 18 months but they are still renting from him over 7 years later. He added, “Good tenants will always be able to stay long term with a periodic tenancy as landlords won’t evict someone if the rent is being paid and the property is being looked after.”
David Smith is Policy Director for the RLA and believes the demand is there from all sides. He said, “Landlords recognise the demand for longer tenancies which provide stability for tenants and landlords.”
Mr Smith wants the Chancellor to back the RLA proposals. He adds, “Recent statements by MPs suggest that positive taxation to support longer tenancies would gain support in parliament, enabling such tenancies to become available far quicker than imposing them by law.”
The Housing Secretary, James Brokenshire also confirmed recently that his department will be consulting on a ‘housing court’ in the next few months. This court would be set up to help speed up justice for tenants and landlords if something goes wrong in a tenancy, especially long-term tenancies.
The Best Start to a Tenancy
Protect your investment by having a professional inventory and check in report carried out as recommended by governing bodies.
Assist Inventories suggest you do this at the start of each new tenancy for best practice. The reports detail a property’s full contents, fixtures and fittings, with photos to show the condition of everything inside the property. Contact us to find out more about our detailed reports and full range of services.