An example of a standard British house Credit Mike Peel (www.mikepeel.net). CC-BY-SA-4.0.

There’s something of a difference between being able to offer a longer and more secure tenancy and a tenant being able to demand a longer and more secure tenancy. The second is likely to reduce the number of properties available to rent, the first to possibly increase. Given the stupidity with which the British housing market is governed I think we know which way this is going to go, no?

Tenants are to given the right to demand three year letting agreements from their landlords.

James Brokenshire, the Housing secretary, will set out plans to give private tenants greater security in their homes.

There’s no problem with people being able to ask or longer tenancies, obviously. If there’s a meeting of desires to offer and accept such then why not, after all?

It is understood that the government will say some 80 per cent of tenants currently have contracts of six or 12 months – and that many want longer tenancies.

This is an oddity of course. But the reason for it is earlier intervention in the housing market. Way back when, back before St Maggie, offering someone a tenancy granted them a whole plethora of rights (“sitting tenants” comes to mind). Including the near total inability to evict, rent rise controls and enough nonsense to pretty much destroy the private rental market in the UK. So, in came a new class of rental agreements, those 6 and 12 month agreements which didn’t confer any of those ongoing rights. At which point people started offering private rentals again.

Yes, sure, rent is expensive these days. But in the late 1970s a private rental was pretty much impossible to find. Some of that law “protecting” tenants had to be undone.

But, this is the thing. Is it that a landlord can now offer a, say, 3 year tenancy without granting rights which drive them out of the market? That would be a good thing, a great thing actually. Why not more choice? Or is something else being considered:

A minimum tenancy term of three years would be introduced under government proposals to give people renting homes in England more security.

Ah, yes, true to form, they’re being idiots. They’re going to impose a minimum tenancy, rather than offer the same protections to landlords that the current 6 and 12 month ones do but just for longer periods. But then, you know, politicians and the British housing market, the one will ever make the second worse.

Landlords who don’t offer a three year tenancy now will not offer any tenancy. How does this improve matters?

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4 COMMENTS

  1. I let my tenants stay as long as they want to stay, want to keep paying, and look after the place (and I do the same the other way around as a tenant myself). This has met quite a few puzzled stares: wot, you don’t want me to sign a new tenancy every six months? Previous tenants have been: 11 years, 7 years, 6 years, and 14 years in the shop. It gets to the point that when a tenant moves out I’ve forgotten what the re-letting procedures are, or they’ve all completely changed.

  2. If you’re a landlord with a mortgage, the chances are that the terms of the mortgage are that the property has to be let on an assured shorthold tenancy of between 6 and 12 months: I’ve certainly not come across any ‘retail’ BTL products that do not have the stipulation because the bank is going to want vacant possession as quickly as possible if they need to repossess.

    • That’s the elephant in the room. Banks will be significantly less likely to want to hold loans on BTL. The increase in illiquidity makes the loan much more risky. What happens with more risk? Return has to rise.
      Nothing good will come from this