What are the benefits of long-term tenants for landlords?
There’s been growing calls for landlords and letting agents to offer long-term tenancies to renters.
Campaigners say longer tenancies give tenants and landlords more security and could go some way in helping to reduce homelessness.
It is estimated one in four households in Britain will be living in privately-rented housing by 2021, with the number of families in rented accommodation growing annually.
But despite the increasing numbers of people renting, 81% of rental contracts are assured shorthold tenancies with a minimum fixed term of just six or 12 months.
Earlier in March, Labour pledged to introduce’ ‘indefinite’ tenancies, based on the Germany model where tenancies last on average 11 years, compared to four in the UK.
As the cost of buying a property continues to rise in the UK, could the German model, where long-term renting is the norm among families and professionals, become the norm here? If so, what benefits are there for landlords?
Research by AXA showed around a third of landlords like the idea of three to five-year tenancies, where the tenant has a break clause. A further third say they are open to the idea, an opinion borne out by the fact that just nine per cent of tenancies are ended by a landlord, showing that the majority prefer to keep tenants on than face the prospect of an empty property.
Finding the right tenants is the holy grail for landlords, but finding them can be costly and time-consuming, with letting agents’ fees, references and the threat of void periods to consider.
Long-term tenancies mean you have a regular income, ensuring greater occupancy and better rental yields.
There is also an argument that long-term contracts attract better, more reliable tenants – as they are making your property their home over several years, they are likely to treat it with more respect. It is also easier to establish a landlord-tenant relationship overtime which can help smooth over issues that may otherwise become a problem.
But, there are concerns among landlord groups that long-term tenancies are weighted too heavily in favour of tenants.
The Residential Landlords Association launched a survey of over 100,000 landlords to get their thoughts on proposals to make longer tenancies the default.
They raised particular concerns that longer-term agreements diminish a landlord’s right to fairly reclaim their property – a clause that would have an impact on mortgage lenders.
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