Yet another leading lettings agent has hit out at the government over its proposals for three year tenancies being the norm in the private rental sector.
Marc von Grundherr, lettings director of Benham and Reeves Residential Lettings, argues that the proposals fail to address the requirements of the UK's diverse and rapidly changing rental landscape.
His comments follow those of former ARLA president Lucy Morton and other leading figures in the industry.
“There is no 'one size fits all' approach to regulating the private rented sector and we believe the government's proposals fail to recognise the diverse needs of tenants and landlords” says von Grundherr.
“We must protect the most vulnerable in society but, as part of a company which has operated at the heart of the lettings industry for 60 years, we understand there are many different types of tenant and therefore many different requirements. A long-term tenancy is not suitable or indeed preferable for many of them.
“The housing market in London functions very differently to that of the rest of the country. The average London asking rental now tops £450 per week according to Rightmove. Most properties fitting into this bracket are studios and one bed apartments occupied by young professionals, 'Generation Rent', who want the flexibility to move regularly as their career progresses. For them, a long-term rental is unthinkable” he continues.
BRRL has 16 lettings branches in prime residential London locations and international offices in China, Hong Kong, India, Malaysia and Singapore, and has a high volume of international business clients both as landlords and tenants.
“Many corporate tenants do request the stability of a longer tenancy but require a break clause at six months” says von Grundherr.
“In 2017, 78 per cent of our tenancies were for one or two years against 82 per cent in 2016 while 22 per cent of tenancies were for two years-plus in 2017 against 18 per cent in 2016. And 71 per cent of our tenants renewed for a second year in 2017.”
The agency says recent tax hikes and increasing regulations mean there are already disincentives for professional property investors, and these new proposals add to this pressure.
“Some [landlords], especially those with buy to let loans, are uncomfortable signing two or three year leases in case their circumstances change. Overseas investors in particular think about the long term and will plan to sell at some point to realise capital growth. They are not emotional purchasers and, if letting a property no longer provides a good return, they will exit the market and look for better value in other asset classes. Longer tenancies will make this difficult.
“Landlords not dependent on a loan are more likely to agree a long-term tenancy as it offers greater security and reduced voids. However, they risk lower rental growth and, with fewer tax incentives for buy-to-let investors, it can be hard to make the sums add up, especially for landlords paying property management fees which vary from six to eight per cent.”