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  • Buy-to-Let

    Government U-turn on 3 year tenancies?



    According to the Sun, the Government is quietly killing off the idea of three year tenancies.

    The Treasury is allegedly opposing it for fear it will "scare off investment in property development". Both May and Hammond are apparently both now against it.

    Worth noting that this is the same newspaper that reported recently that the Government would be making an announcement of the confirmation of 3 year tenancies before the end of August, so that prediction was completely wrong and now they have published almost the exact opposite.

    It will be interesting to see what pans out, although if it is true, it could show the Government's attitude to landlords is starting to soften and they realise they have gone too far in deterring landlords from the PRS?

    We can live in hope!  Initial government proposals for the ground breaking policy were made in June, and are currently being consulted on for a decision in time for the Tory conference which kicks on on 30th September, so we don't have too long to wait ...

    For background see - Government proposing 3 year minimum tenancy

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    It didn't put off the Scottish Government who brought in new tenancies in December 17 which don't have an end date and don't have a no fault ending any more.

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    They do allow for ending the tenancy in order to sell.

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    So just putting the house on the market is a good enough reason, even if you don't go through with the sale?

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    If a 3-year tenancy is better than a 1-year, then tenants would be happy to pay more for them. In my experience they aren't, so I infer that they don't particularly want them at all.

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    Last 3 calls I have received today for advertised rooms have been from two 50 year old nurses who are looking for an initial 1 month tenancy and academic looking for a 3 week tenancy.

    So far in 10 years of renting out rooms to professional tenants has anybody asked me for a 12 month tenancy or longer.  I can fully appreciate families wanting a longer tenancy and government forcing longer tenancies on landlords for those tenants on benefits but there are huge number of highly educated professional tenants who want the ability to be mobile and not legally bound to a long term tenancy.

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    But if they wanted a 3-year term rather than a 1-year, were they prepared to pay more for it? If not, they are saying it's not worth more. So if it's not worth more why would it ever have made sense for it to be mandatory?

    I assume BTW that the 3-year provision would be optional on tenants.

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    Responding to a report published today by Shelter which calls for England to adopt Scotland’s model of indefinite tenancies in the private rented sector, David Smith, Policy Director for the Residential Landlords Association said:

    “Shelter fails to recognise key differences between England and Scotland.

    “The only reason the Scottish model has worked is because a properly funded and staffed housing court was established to cope with the dramatic increase in repossession cases needing to be heard.

    “Across England and Wales it takes an average of over five months for landlords to repossess properties through the courts. This is not good enough.

    “We call on Shelter to back the RLA’s plans for a dedicated housing court that can process repossession claims in legitimate circumstances without frustrating landlords. Simply tinkering with the existing courts will not work.”

    David Smith continued:

    “It is also disappointing that in arguing that changes in Scotland have not affected the supply of homes for rent, Shelter has used figures from before the changes were introduced.

    “As the latest data from the Royal Institution for Chartered Surveyors notes clearly, whilst the demand for new homes to rent has increased considerably in Scotland, new landlord instructions have fallen, providing less choice for tenants.”

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    If the courts were geared up and the systems were in place to physically remove people from a property within 2 weeks of a tenant being 2 months behind on rent I can’t see a downside .
           Which Landlords would be unhappy with having a tenant staying for a minimum of 3 years especially if the house can be repossessed anytime with 2 months notice in order to sell it ? 
           Can someone’s give me some negatives as I can’t see any especially as I wouldn’t want to increase a tenants rent if they committed for 3 years because void periods and refurbishment would exceed any extra rent earned .
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    Well sometimes you might have half a mind to sell/ extend/refurb a property in say a years time.  Perhaps it is your plan but you are busy on another project now.

    Let's say you are really upfront about this with new tenants who are also upfront in telling you that they only want to stay for a year.  Everybody is happy.  So then let's say their circumstances change and they insist on staying 3 years?

    I can't see ANY advantage in having to offer 3 year tenancies when it is only one sided on the part of the landlord.

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    To me a 3 year tenancy is a huge advantage over 6 x 6 month tenancies !
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