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Mystery surrounds 'longer tenancies' consultation announced in Budget

The industry is awaiting details of the latest government consultation concerning the private rental sector which will consider longer tenancies.

The consultation was announced in yesterday’s Budget with a hint by Chancellor Phillip Hammond that longer tenancies could be encouraged by tax incentives - but no further details were given. 

Now the Department of Communities and Local Government is expected to provide additional information in the coming days.

“The fact that a consultation will now take place should be welcomed. From the landlord’s perspective, it’s better to have the security of knowing your property is let, albeit without a regular percentage increase in the rent, than it is to enjoy five per cent income rises but with the risk of costly void periods. It’s all about looking at the bigger picture and in this instance, that’s your profit and loss account” says James Davis, founder of Upad online lettings agency.

“A certain level of flexibility will need to be employed so that any investor with a loan or loans against his portfolio isn’t penalised by tenancy agreements of longer than three years as this could limit his financing options” he adds.

David Smith, Policy Director for the Residential Landlords Association, was less enthusiastic about how different Budget policies will hit the letting sector.

“With ever growing numbers of families with children in private rented housing we recognise their needs for longer tenancies. The Budget could have acted on proposals we have made by providing tax relief for landlords prepared to do offer longer tenancies and taking action against mortgage lenders who block them being granted. Instead we have yet another consultation adding to the 15 already ongoing which relate to the private rented sector. Tenants cannot live in consultations” he says.

“The renewed focused on corporate money in high rise city centre rental property also neglects rural areas and towns, and fails to support the majority of landlords who are individuals and can provide the dynamism the rental market desperately needs. The value of the private rented sector is its responsiveness and diversity and the Budget does nothing to encourage this” he adds. 

Glynis Frew, chief executive of Hunters, says: “We were disappointed that there wasn’t further discussion of increased regulation for the lettings industry, which is crucial in ensuring a more transparent and better functioning industry for tenants, landlords and agents.”

This view was echoed by Iain McKenzie, chief executive of The Guild of Property Professionals, who says: “MPs have raised their concerns about how long it is taking for details to be announced, and lettings agents need to know what is coming and when to expect it. Agents are being held in limbo and we need to know the details.”

Meanwhile Danielle Cullen, managing director of StudentTenant and ClickTenant called the Budget announcements “crippling” for landlords. 

“We’re still no more informed on the tenant lettings fee ban, which is also set to increase rental costs for landlords, as many agents have outlined they will have to pass over the costs” she says. 

  • Simon shinerock

    Individual Landlords penalised, Corporate and Institutional Landlords incentivised, it’s all part of a plan and will result in the creation of a lot of poor quality small apartments from which it will be hard to escape. I like the comment about the diversity individual landlords bring to the market, there has to be a backlash to this cynical and unfair approach

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    So what happens if a landlord has a marital breakdown and has to sell the property as part of the settlement when the tenants have 3 years to go? Just imagine if you had just put a new tenant in on a 3 year contract and then suddenly the government changed all the rules whereby you can’t offset your interest payments against the rent and then soon afterwards mortgage rates increased and then you get a call from your letting agent stating that as the government have just announced new rules about charging tenants fees that as a consequence they are increasing their fees to landlords. JUST IMAGINE.

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    Don't worry, Pension Funds will make efficient property managers, especially with all the tax payer subsidy they will need to maintain their high salaries and profits.

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    I'd welcome fewer restrictions imposed by lenders, if that's what the government has in mind. LandLords and agents are in the best position to decide what tenancy length and type of tenant is most appropriate in a given situation and external influence muddies the water. Most of my tenants elect to have periodic tenancies anyway.

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