Fears that 3-year tenancy will be introduced prematurely

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 3-year tenancy:

There has been press speculation that the government is intent on introducing a mandatory 3-year residential tenancy, even before the ongoing consultation process on the major change is complete on the 26^th of August.

Despite fears expressed by landlord groups that the move would be detrimental to the private rented sector (PRS), the Government’s intent appears to be there. A heavy clue lies in the consultation’s title: “Overcoming the barriers to longer tenancies in the private rented sector.â€�

Landlords groups have been warning that the Government should not make any decisions on longer term tenancies until the consultation process is complete and all interested parties have had their say. Landlords are urged to participate in the consultation process – see here

Responding to reports in The Sun newspaper that a decision will be announced next week, the Residential Landlords Association (RLA) has warned that any such move would be a “huge breach of confidence in the democratic process�, given that the consultation on longer tenancies does not close until 26^th August.

Landlord groups have said that they support longer tenancies in principle, but on a voluntary basis, not as a compulsory regime which means that they will be imposed as the norm.

One suggestion is that financial incentives such as tax relief would be the best way to ensure that landlords offer longer-term tenancies to those that want them and where landlords are willing to give them.

The proposed new tenancy regime would in effect remove the no-fault eviction process so valued by most buy-to-let landlords, known as section 21. It would be replaced with an adversarial court process (section 8) where the onus of proof of tenant default is placed on the landlord.

This section 8 process relies on 17 prescribed grounds for possession, meaning that possession is no longer assured when a tenancy goes wrong. The decision to award a possession order is most often at the discretion of a judge in what is often a long drawn out and expensive legal process. This would considerably increase the letting risk for landlords.

The RLA comments:

“The English Housing Survey shows that private sector tenants are, on average, living in their homes for almost 4 years increasing to 17 years for those aged 75 and above. So the longer tenancies demanded are already a reality for many.

“The RLA supports longer tenancies but making a three-year tenancy the default position by law would be complex as it requires trying to establish every possible scenario in which a tenant might not want such an agreement, such as students, and how that would work. The alternative, which we support, is the use of financial incentives.

“Any measures to encourage longer tenancies need to go hand in hand with reforms to improve and speed up the ability of landlords to regain possession of a property where a tenant is, for example, failing to pay their rent or committing anti-social behaviour. This includes the Government progressing with plans for a new housing court.�

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Fears that 3-year tenancy will be introduced prematurely | LandlordZONE.

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Are Eastern Europeans Leaving The UK?

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I have a theory, and I hope I am wrong!

Many Eastern Europeans came to the UK because they could earn more, and despite the higher costs of living they could send money home to their families.

However

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Respond now or get 3 year tenancies!

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Communities Secretary, James Brokenshire, is reported by the Sun to back calls introducing 3 year tenancies in the Ministry of Housing, Communities and Local Government consultation titled, ‘Overcoming the Barriers to Longer Tenancies in the Private Rented Sector.’

The Decision on the consultation could possibly be taken as early as next week so landlords are urged to respond now if they haven’t already.

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Tax hikes for buy-to-let investors will drive up rents

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Landlord Tax:

A RICS members’ survey shows that fewer landlords are entering the buy-to-let market while others are leaving it, resulting in reduced supply and ultimately higher rents will follow.

The Royal Institution of Chartered Surveyors says that the most striking feature of its July 2018 survey is the continuing reduction of new property being bought by landlords following two years of rental sector investment decline.

Lettings data returned by RICS members shows the continuing impact of the landlord tax changes on supply of rental property, reflecting a major national shift in the buy-to-let investment market following years of continuous growth.

But whilst the supply of rental stock is increasingly constrained, tenant demand shows no signs of abating, a consequence of which RICS concludes will be rental growth, rising rents for tenants.

Over the next twelve months, RICS says, rents are expected to increase by an average of around 2% nationally.  But on current supply / demand trends this could force a cumulative national average rent increase of around 15% in the next 5 years.

So, in the absence of either a significant increase in the Government’s Build to Rent programme, or more local authority funded social housing, of which there is little evidence for both so far, it is unlikely the rental shortfall will be made up.

This may be some good news for those landlords who are prepared to stay the course, but not so for the many financially strapped tenants unable to save for a deposit in order to buy, and who are therefore looking to rent for the long term.

“While the current focus is rightly on using regulation to improve the experience for tenants, Government must urgently look again at the PRS as a whole, including ways to encourage good landlords.

“Ultimately, Government must consider the impact of its policies, and if the wish is to move away from PRS, it must provide a suitable alternative.

“If they wish to improve PRS, as we have suggested by professionalising through regulation and the PRS code, there is justification to reconsider the approach taken to tax,� says RICS.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Tax hikes for buy-to-let investors will drive up rents | LandlordZONE.

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Short-term tenancies: 3 instead of 6 months?

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I’m in the process of selling one of my properties however have recently found an overseas tenant who is ready to move in soon, checked out her employment history, etc.

My question is: are there legally recognized tenancies shorter than a standard 6 months AST?

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Government confirms NO announcement due on long term tenancies

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The Ministry of Housing, Communities & Local Government has confirmed there is NO announcement due on long term tenancies and reassured landlords all responses will be taken into account before a decision is made. The news comes in the wake of a report in The Sun newspaper today, in which an unnamed source said Housing […]

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It a personal Brexit for this landlord!

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I couldn’t think of a title for my article so i will leave that to the clever people at Property118.

With Brexit, Section 24, Selective Licensing and all the other crap the Government are throwing at us I am still undecided on what to to

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Outcome of a consultation with Insight

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A few months ago the Property118 team was called in to assist an accountancy practice to consult on the strategic restructuring of a new client (a landlord business partnership with 67 properties) which the accountants had recently been engaged by.

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Future Renting: Can you really afford to miss out?

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With a tidal wave of legislation change on the horizon there are more tough times ahead for the PRS landlord.  An already complex regulatory landscape, with more than 150 Acts of Parliament and 400 regulations affecting PRS landlords, the sector is now bracing itself for The letting agent fee ban Changes to mandatory HMO licensing […]

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Property Investor Seminar – Norwich

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I would be delighted if any Property118 readers and a guest can attend our next Property Investor Partnership Seminar which is taking place on:

Thursday 20th September, commencing at 6.45pm for a 7.00pm start.  

The event will be held at Insight

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