There are “advantages all round” in the certainty that three-year tenancies and even rent controls can offer, according to the head of Carter Jonas letting agency Lisa Simon.
“Few tenancies last just the six months that politicians seem to think. The lifespan of three years suggested by Labour, after an initial six month trial period, will often be foreshortened by the tenant’s desire to move” she says.
In any case, Simon says there are advantages to the longer tenure not being advocated by Labour. “The tenant has a degree of security while the landlord has a better knowledge of the likely consumer price inflation-linked income and potentially less worry about non-earning voids between tenancies” she says.
For central London landlords, she says, the impact would be minimal as the corporate market for years has routinely demanded pre-agreed extension periods and rent negotiated in advance, usually in line with RPI.
“Some more-outdated mortgage lenders will need to amend offers which currently restrict buy to let landlords to providing tenancy agreements for a maximum of 12 months. They should regard this period of certainty as an advantage that allows investors some assurance over their ability to repay the mortgage through property earnings” she says.
However, Simon says safeguards to remove bad tenants must be appropriately robust to accommodate longer tenancies. ‘Model’ tenants who turn into the tenant from hell in the seventh month must not have more protection from repossession, she warns.
“Lettings agents may have to rebalance their budgets to exclude tenant fees. It is important to prepare, although this may mean raising letting and management fees charged to landlords who will pass them on through higher rents” she says.
Simon believes letting agents will have a certainty that their fee income will grow in line with consumer price inflation as rents grow.
“But politicians also have to realise that imposing the duties of government on to landlords and lettings agents, such as immigration checks .... have to be paid for. If the government of whatever hue does not want to fund this work, and it probably will not, then it has to accept that a fee is charged to the landlord if the agent does the work” she concludes.