It seems that every month I have a new piece of legislation to tell you about, and this time it`s no different. After more than 30 years in the industry I do despair how our housing laws are constantly “tinkered” with by persons who really have no knowledge or understanding of how their purely reactionary decisions will work in practise. This one however really takes the biscuit.
There is a government plan to introduce mandatory minimum 3-year tenancies. A long time ago, the introduction of a 3 or 7 year tenancy was muted, but this was on the basis that it would be an alternative to the current Assured Shorthold Tenancy (which can last just 6 months) and not a replacement for it. The thinking was also that some of the minor repairing responsibilities would be passed on to the tenant to undertake rather than the landlord. Now that sounded like a good idea. But let`s consider the implications of a mandatory 3-year tenancy. Tenants may like it in the whole, particularly as they can break it by giving 6 months` Notice to leave. But what about the landlord who only wants to let for a year whilst he is away working, or to use the income to pay for a relative`s healthcare, or because he couldn`t sell it as no-one can currently afford to get a mortgage anymore without selling said relatives organs.
Apparently, they will be able to remove the tenant if they want to sell the house, but how do you police that? More of a problem will be when an owner`s Buy To Let mortgage comes up for renewal. Mortgage lenders typically give permission to let for 1-year tenancies, they don`t like longer as it would make it harder for them to repossess properties if the mortgages payments are not met. Buy To Let lending is already in decline since the government played around with the tax liabilities for landlord`s and added further stamp duty taxes to the purchases. So, on the one hand we have government harping on that we need more homes to be built but on the other hand, they take away any incentive for the Private Rented Sector to help them.