Will three-year tenancies become the norm?

23rd July 2018  |  12:00am

Will three-year tenancies become the norm?


On 2 July 2018 the UK Government launched a consultation inviting views and comments on the benefits and barriers of landlords offering longer tenancies in England.

The consultation is part of the Government’s plans to increase security for tenants in the private rented sector, while balancing landlord’s needs to regain their properties when their circumstances change.

The Government are also working with the Ministry of Justice to understand issues with the current processes for housing in the tribunal and courts system. These include the time it takes for cases to be completed. A call for evidence is expected later in the year.  

According to the Secretary of State for Housing, Communities and Local Government the answer lies in good design and education. He says, “models of the past have failed where they have regulated rents, which history tells us doesn’t work, or restricted a landlord’s right to repossess their property, risking a loss of vital supply.” 

The Government’s suggested longer-term tenancy model involves:

  • A minimum three-year tenancy but with an opportunity for the landlord and tenant to leave the agreement after the initial six months if dissatisfied. If both landlord and tenant are happy, the tenancy would continue following the break clause.
  • Following the six months break clause, the tenant would be able to leave the tenancy by providing a minimum of two months’ notice in writing.
  • Landlords can recover their property during the fixed term if they have reasonable grounds. These grounds would be in accordance with the existing grounds in Schedule 2 of the Housing Act 1988, and would include antisocial behaviour and the tenant not paying the rent. Landlords must give the tenant notice (which would follow the notice set out in section 8 of the Housing Act 1988 for the ground or grounds used). Additionally, there would be grounds which covered landlords selling the property, as is possible in the current model tenancy agreement, or moving into it themselves. These grounds would require the landlord to provide at least two months or eight weeks’ notice in writing.
  • Rents can only increase once per year at whatever rate the landlord and tenant agree, but the landlord must be absolutely clear about how rents will increase when advertising the property.
  • Exemptions could be put in place for tenancies which could not realistically last for three years, for example, short term lets and student accommodation.

The Government are seeking views on how a longer tenancy model could be implemented. They are also looking at whether to mandate the proposed longer-term model as the ‘default’ option, with the opportunity to opt for a shorter term let if requested by the tenant. Alternatively, the Government say that financial incentives to landlords could also be explored to encourage longer term tenancies.

Another option the Government are exploring is to promote better education and try and change behaviour through sharing of guidance and raising awareness. This includes the option of a kitemark on property portals, and adverts to indicate properties where the landlord is keen to consider a longer-term tenancy, or simplifying the existing model tenancy agreement to make it easier to use and explore ways to more actively promote it.

Source: http://www.arla.co.uk/news