Shelter’s 5-year tenancies – what other research says
Housing charity Shelter is stirring up a fuss in the private rental sector with a call for five-year tenancies for buy to let properties.
At the nub of the debate is Shelter wants more rights for tenants, while landlords want control of the property they own – to find out more read the LandlordZONE story of the week [Opens in new window]
Most tenants pay their rent on time, look after their homes and have good working relationships with their landlords.
This matches the landlord objective of tenants who pay their rent and stay in their home, keeping costs down for sourcing new tenants.
Somewhere on each side are bad tenants and bad landlords – but only around 200 landlords are prosecuted by councils over housing issues each year out of around 3.8 million private rented homes.
The assumption is there will always be bad tenants and landlords, but the number is small compared with the number of tenants and rental properties in the sector.
Only 12% of tenants stay for five years
New research by the National Landlords Association (NLA) for the quarter ending July 31, 2012, released just prior to Shelter’s study shows 54% of tenancies last between two and three years, and that 32% last longer than four years – but only 12% last for longer than five years.
However, despite more tenants staying put for longer, nearly 50% of landlords experienced rental arrears in the last 12 months and 37% are worried about instances of arrears in the months ahead.
“Longer tenancies and a lower turnover rate are both signs of much needed stability for both landlords and tenants in tough economic conditions. Private landlords are a key part of the investment mix required to meet the rising need for more flexible forms of housing at a time when demand for rented accommodation far outstrips supply,” said David Salusbury, chairman of the NLA.
Spain to drop five year tenancies
Interestingly, the Spanish government is reforming tenancy laws to stimulate growth in the economy.
This month, the government proposed a key change – removing a tenant’s right to rent a home for five years with an optional three years with the landlord’s agreement. The new term is three years with an optional year if the landlord wants to extend the contract.
The reason – the law stagnated the housing market with little private investment in rental property. For a country with 25 million homes, just under 2 million were private rentals, compared to Britain’s 22 million homes and 3.8 million rentals.
Politicians blamed stagnant job mobility on the lack of rented homes, as workers could not give up a property and easily rent another.
Article courtesy of LandlordZone
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