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It was reported in July that the government is planning to introduce new compulsory three year contracts whilst allowing tenants to walk away from the tenancy before the end of the term if they wish.

Unsurprisingly most landlords have expressed anger at the proposals.

At present, some 80% of tenancies in England and Wales are assured shorthold tenancies of six and twelve months. Within that timescale, a landlord can currently ask a tenant to vacate the premises, sometimes at short notice.

The proposals of the Housing, Communities and Local Government Secretary, James Brokenshire, will put an end to shorthold tenancies, if the legislation goes ahead. There will be exemptions for student lets, however, where the length of tenancy is linked to the academic year.

The Guardian quoted Brokenshire as saying “It is deeply unfair when renters are forced to uproot their lives or find new schools for their children at short notice due to the terms of their rental contract.

“Being able to call your rental property your home is vital to putting down roots and building stronger communities. That’s why I am determined to act, bringing in longer tenancies which will bring benefits to tenants and landlords alike.”

The National Landlords Association (NLA) is far from convinced, however, and pointed out that only four out of ten tenants actually want longer term contracts.

The article went on to quote NLA chief executive Richard Lambert who said “This is a policy which the Conservatives derided when it was put forward by their opponents in the past two general election campaigns. It’s hard not to see this as more of a political move aimed at the renter vote than a genuine effort to improve how the rented market works for all those involved.”

It is likely the proposals will have a dramatic impact on the buy-to-let industry, which took off after the introduction of the assured shorthold tenancy. The six-month and one-year contracts gave lenders the confidence to grant mortgages against properties where they knew they could repossess the property at short notice if necessary. But a three-year term is likely to make lenders wary about granting loans, or they may increase the interest rate to reflect the additional risk.

Rest assured that I will be keeping a close eye on developments. If you are a landlord and have concerns please feel free to call me for a personal chat about the situation.

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We are independent letting agents with a personal service covering the three counties of Worcestershire, Gloucestershire & Herefordshire, all from our central Tewkesbury based offices.

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