Published in October by the Community Secretary, Eric Pickles. They are proposing a model tenancy agreement, to ensure families can benefit from longer tenancies, without changing the existing legal framework for the rental market.
The Government believes that “Longer tenancies will give families greater certainty and security, especially for those with children at school. This will reduce costs for both tenants and landlords who will not have to pay letting agents to arrange frequent contract renewals. Tenants will be able to access better information so they know the types of tenancies they can request.”
The average length of stay has increased over the last 5 years from 16.7 months to nearly 20 months, according to regular ARLA survey figures. Throughout the length of tenancy there will always be a risk of tenants defaulting on the rent perhaps through loss of job, relationship breakdown or general change in financial circumstances. To protect against this and save on constant headaches of 6 monthly or annual policy renewals, the Government will encourage mortgage lenders to follow the recent change in policy by Nationwide Building Society, so that buy-to-let borrowers can offer longer initial fixed periods in their tenancy agreements.
The new model tenancy agreement will not require a single tenancy agreement to be used. However, there is a consensus among landlord and tenant groups that a better understanding is needed on a number of issues, in addition to encouraging longer tenancies and rental certainty, for both landlords and tenants when they enter into agreement.
Both the Residential Landlords Association and Shelter have developed models to encourage longer tenancies but within the existing legal framework.
Any model for longer fixed-term tenancies should highlight that:
• tenants can request a longer tenancy which enables greater stability, where both parties agree, while maintaining the flexibility within the private rented sector that many tenants value
• rent review clauses, which are index linked to inflation, will provide both landlords and tenants with greater financial certainty to plan over a longer period
The additional advantages to landlords in entering longer fixed-term tenancies include:
• avoiding potential periods of vacancy between tenants
• reducing the costs of having to find new tenants on a regular basis
• encouraging tenants who live in properties for longer to take greater care of the property
• break clauses in any model tenancy agreement, so that landlords and tenants will be able to end the tenancy early, for example if the landlord wishes to sell the property
• Government expectations that any model tenancy agreement should provide an initial probation period for both parties to ensure they are content to enter into a longer agreement with each other (as put forward by the Residential Landlords Association).”
To read the full press release and further details about “Better tenancies for families in rental homes” click here.