Is five years too long in the Private Rental Sector?By Mark Long
A move to longer fixed term tenancies is the subject of much debate in the Private Rental Sector at the moment.
Much of this discussion is being driven by those representing the views of tenants, but for any initiative of this kind to stand a chance of gaining momentum, landlords need to be convinced it is beneficial to them, so what is their perspective? In a word...lukewarm.
BVA BDRC has explored this issue in its Landlords Panel research survey, canvassing the views of over 1,000 private landlords. When asked how comfortable they would be to move from their current tenancy arrangement to a fixed five year agreement, 55% rejected the idea for any of their properties, with smallest landlords being most reticent.
Just 5% of landlords told us they would be prepared to migrate to a five year tenancy for all of their properties, hardly a ringing endorsement of the longer term proposition. So why is the idea so roundly rejected? A loss of flexibility is the most frequently mentioned barrier, closely followed by concerns that errant tenants could not be removed as smoothly or quickly as is possible at the moment.
An interesting backdrop to this issue is the current tenancy length situation. Received wisdom is that the majority of tenancies are for 12 or 18 months, with little being offered beyond that. However, BVA BDRC’s study indicated that the average tenant stays in situ for two and a half years, with three in ten landlords experiencing typical tenancies of three years or more.
Landlords also indicated that demand from tenants for significantly longer agreements is simply not there in substantial volume at the moment. Only one in ten landlords reported that they have been approached by a tenant requesting a significant extension to an existing agreement.