The Business Legal Services Blog

Rented Focus: Are three-year fixed terms the future?

Would you want to offer tenants a three-year fixed term? In this month’s column, Sarah Coates-Madden discusses government plans to introduce longer tenancies and the impact on landlords…

I’ve heard the government wants to extend fixed term tenancies. Is there anything I can do to object?

Last month, the government launched a consultation on the introduction of longer tenancies. It believes doing so would resolve the issue of renters being forced to leave their homes at short notice.

The argument for lengthening fixed terms is that the current six month minimum on assured shorthold tenancies prevents families from putting down roots, subjects them to repeated removal costs and disrupts children’s education.

Most landlords I know would dispute the idea that giving tenants two months to vacate their property is ‘short notice.’ If they won’t leave, it can take another two months to obtain a possession order from the court and the same time again to be given an eviction date. In total, this process can add six months to the initial fixed period.

However, the government thinks renters should have longer security and is proposing a minimum three-year term, with a break clause after the first six months, allowing either party to end the agreement without reason. It is thought this will allow tenants to plan for the future and give landlords the flexibility they need.

In practise, many tenancies roll on past their initial fixed term and according to the consultation paper, renters stay in a property an average of four years. It also reveals that Citizens Advice research suggests only one third of tenants would want a longer fixed term.

There is nothing to stop landlords offering extended tenancies now, but many would consider three years too great a risk. They would rather issue a shorter tenancy than have to resort to the court process to gain possession, in the event of problems.

Scotland has chosen the more extreme route of having no fixed terms at all, but no way for a landlord to gain possession without grounds. This means tenants have an indefinite security of tenure, provided none of its modernised grounds for possession applies.

There are no plans to do the same in England and Wales, but the government has recognised the frustrations felt by people using the courts and is looking at ways to improve the process, for example, by possibly including a specialist housing court.

If you would like to contribute to the debate on fixed term tenancies, you have until 26 August to respond. You can read the full consultation document here. Comments can be submitted online or by email, using the contact details provided.

For now, assured shorthold tenancies will continue to be the most common type of agreement used in the private rental sector.

If you would like to discuss the issues raised here, don’t hesitate to contact me on (0114) 218 4000 or email info@tayloremmet.co.uk.

 

Leave a Reply

Your email address will not be published. Required fields are marked *