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Government Announces Plans for Minimum Three Year Tenancies


Landlords have voiced their disapproval this week at government plans to implement minimum three-year tenancies.

The longer tenancy agreements would stop landlords forcing tenants out at short notice, although tenants would still be able to give notice themselves.

With around 80% of tenancy agreements in England currently set at six or 12 months, this jump to 36 months would be a huge change for the industry.

The main foundation of the Buy-to-Let industry, the assured shorthold tenancy, currently leaves tenants at risk of eviction at short notice according to the Housing, Communities and Local Government secretary, James Brokenshire.

“It is deeply unfair when renters are forced to uproot their lives or find new schools for their children at short notice due to the terms of their rental contract.

“Being able to call your rental property your home is vital to putting down roots and building stronger communities. That’s why I am determined to act, bringing in longer tenancies which will bring benefits to tenants and landlords alike.”

Essentially, this longer-term agreement would provide tenants with more protection, allowing them to leave of their own free-will but providing better guarantees if they wanted to stay in a property for a longer period of time.

The proposed plans would have a huge effect on the Buy-to-Let market, which found traction on the back of the assured shorthold tenancy. While longer tenancy times could be good for combatting voids for landlords, it may also make lenders more conservative when granting loans, especially if they know they cannot repossess the property at short notice. Another side-effect could be the increase in interest rates to mitigate the additional risks.

According to Polly Neate, chief executive of housing charity Shelter, losing a tenancy is one of the main causes of homelessness. She believes that ‘everyone who rents will be very pleased to see a move towards longer tenancies’.

This proposal represents another step by the Government to improve the Private Rented Sector, which currently makes up around 25% of the wider UK market and is growing at an unprecedented rate as more people begin to choose to rent over home ownership.

The minimum three-year tenancies model will be part of a consultation that looks at how other countries have adopted longer minimum terms and will provide ideas on implementation.

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