The government has revealed that it may use cash incentives or taxes in order to encourage landlords to offer longer three-year tenancy agreements.
Under proposals released in July by the Ministry of Housing, Communities and Local Government, tenancy agreements would move from a two-year model to one that lasts three years.
Break Clause
Landlords would need to offer a three-year tenancy as a minimum, with an opportunity after six months to leave the agreement if dissatisfied with the tenant. If all goes well after the six months, the tenancy would continue as normal. Once the six-month break clause is completed, the tenant would be able to leave the tenancy so long as they give at least two months’ notice in writing to the landlord.
The landlords can only repossess the property after six months if they intend to sell the property or by using a Section 8 eviction notice.
Talking about how the new three-year tenancy length could be implemented, the government’s consultation stated that financial incentives to landlords would be the best option. It added that although this would be quicker to implement it would require new legislation and could be administratively difficult.
Research included within the proposal cited the Residential Landlords Association (RLA), which stated that 64% of all landlords said that they would be encouraged to offer three-year tenancies in return for tax relief.
Benefiting Tenants
The longer tenancies would benefit renters, who would pay reduced letting fees. According to the consultation, agents often encourage short-term contracts in the hope of gaining more tenancy renewals where they can charge more fees.
According to Property Industry Eye, David Smith, who is policy director at RLA, said the reduced taxation option would definitely encourage homeowners to rent their homes out on a longer-term basis. However, he warned against making three-year tenancies a statutory requirement, saying that many tenants did not want to be tied to properties long-term.
Meanwhile, letting agents Bath like https://www.pritchards-bath.co.uk/lettings/ can expect yet more change in the market after James Brokenshire, the Housing Secretary, outlined plans for a specialist Housing Court to help and speed up tribunal services in property cases.
He added that ground rents could also be reduced to zero when there are long leases in place for houses and flats.