Longer tenancies – agents’ consultation responses could be key

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Longer Tenancies:

PropTech provider PayProp is encouraging letting agents and property professionals to respond to the government’s consultation on longer tenancies.

The automated rental payment platform says agents’ input could be vital in shaping the future policy framework as the industry experiences ongoing change, putting pressure on existing rental tenures.

There’s not long left to contribute

Back in July, the government launched an eight-week consultation on the subject of longer tenancies.

The Ministry of Housing, Communities and Local Government said a rise in families and older people renting meant there is a growing need for ‘longer, more secure tenancies than the minimum six months offered by the assured shorthold tenancy regime’.

The consultation discusses the pros and cons of introducing a three-year minimum tenancy with a six-month break clause. It also outlines a number of questions for respondents to answer.

“Letting agents who want to have their say on the government’s plans to introduce longer tenancies don’t have long to respond to the consultation, as it closes on August 26,” says Neil Cobbold, chief operating officer of PayProp UK.

“Consultations are designed to give important stakeholders a voice in shaping future legislation. For something as significant as overhauling the current structure of tenancies, the more agent and landlord feedback received by the government, the better,” Cobbold says.

Agents’ experience is valuable

Letting agents’ varied industry experience – working with different landlords and tenants at a range of properties over a period of time – could be extremely valuable to politicians shaping the proposed framework around longer tenancies.

“Dealing with new tenancies and renewals on a regular basis means letting agents are well placed to provide feedback on typical tenancy lengths and any potential issues or unintended consequences with longer minimum tenancy agreements,” explains Cobbold.

“Agents also speak daily to landlords and tenants so they will be able to provide useful insight into the consumer reaction to these proposals and whether longer tenancies are something landlords and tenants are keen to see introduced.”

A seismic change for the rental sector

The government’s proposals for a new tenancy framework represent a complete overhaul of the current assured shorthold tenancy (AST) structure.

Should the new proposals be introduced, there’ll be new rules on notice for leaving a tenancy and notice for regaining a property, which will only be possible if the landlord has ‘reasonable’ grounds.

There are also plans to limit rent rises to just once per year at a pre-agreed rate.

“These proposals would represent a significant change in processes for letting agents and landlords operating in England,” says Cobbold.

“Last year, there were similar regulatory changes made in Scotland when the Private Housing (Tenancies) (Scotland) Act 2016 was introduced. It would be beneficial for English stakeholders to find out more about the new Scottish system, how it has changed the market and what mistakes could be avoided.”

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Tenant too young to look after property

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Hi all, I am a newbie here and in the properties business. I bought my first property 3 years ago and have same tenant and estate agent fully managing property since.

8 months ago I realised the agent had not inspected property for over a year and sensed something was wrong so I contacted the tenant directly and she told me the agents have been ignoring her since the beginning of the tenancy and she gave up reporting damaged or faults as they never got dealt with.

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Humber Landlords’ Association taking Hull City Council to the High Court

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A new policy from Hull City Council will affect landlords’ operations and could spark a homeless crisis through repossessions and significant rent increases in any of Hull’s twenty-six thousand rental properties.

The Humber Landlords’ Association (HLA) is taking Hull City Council to the High Court with support from two national associations –

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Discrimination in the rental sector

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David Cox, Chief Executive, ARLA Propertymark comments on the story from Shelter and National Housing Federation about discrimination in the rental sector:

“This is a systemic problem with how housing benefit works. Rents are paid in advance, whereas housing benefit is paid in arrears

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The buy-to-let market faces a tough three years

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Buy-to-let Mortgages:

Investment in the private rented sector by small-scale buy-to-let landlords is expected to decline over the next three years, before returning to growth after 2023.

That’s according to a recent Centre for Economics and Business Research (CEBR) report commission by Shawbrook Bank and reported in mortgagesolutions.co.uk/news

The buy-to-let mortgage market has seen substantial falls over the last two years. This follows various government policy interventions including the removal of mortgage interest tax relief, a premium on investment property stamp duty land tax, a tightening of underwriting regulations and a plethora of new private tenancy regulations.

The study predicts that growth will return by 2023 but not before the loss of 360,000 mortgage sales to the sector. The results of the study have implications for all those operating in and servicing the sector including landlords, letting agents, brokers and mortgage lenders.

CEBR predict that the sector will continue to lack investment as well as suffering divestment over the next three years, before the market stabilises in 2021, and returns to growth two years after that.

Figures produced in the Shawbrook report show that mortgage sales fell by 13% in 2016 and even more, by 27% in 2017, as the full impact of the government’s regulatory changes were felt.

The report anticipates that the decline over the next three years will be less severe that that experienced over the last two. Continuing strong tenant demand in the private rented sector, and a steady increase in the number of professional landlords taking up the slack, will help counter the ill effects.

Shawbrook thinks that in the absence of the buy-to-let market reforms demand for BTL mortgages would have been sustained for longer, and averaged at around 13% of the whole UK mortgage market up to 2023, instead of the likely post-reform era share of just 7%.

Karen Bennett, managing director for commercial mortgages at Shawbrook has said:

“While the series of government and regulatory changes have had a significant impact on the sector, we have seen the impact felt more heavily among the amateur landlord community which has presented growth opportunities for professional investors.

“Recent political turbulence has had an amplifying effect on investor confidence but positively, the market remains buoyant for those with a long-term strategy who draw upon specialist advice to fully understand the impact of these policy shifts.

“Regulatory change that supports the public interest is not something to be afraid of, and we predict that this high performing asset class will remain a fundamental strength over the long-term provided lenders continue to adapt and change alongside it.�

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