It’s a debate that has spanned years and been discussed at all levels of the Private Rented Sector (PRS), but with countless opinions and conflicting factors regarding the benefit of longer term tenancies, will they ever become a genuinely popular option?
The issue was readdressed in the Government’s recent White Paper, ‘Fixing our broken housing market’, which suggests a series of measures to “make renting fairer”, one of which is the proposed introduction of longer tenancy agreements for new build to rent properties.
Housing and homelessness charity Shelter has campaigned hard for longer term tenancies, claiming that short-term tenancies make life especially difficult for parents with children. However, it remains unclear whether the current demand for long-term arrangements warrants substantial reform, with existing legislation already enabling three-year tenancies to be granted by landlords.
At the recent ‘Paragon Great Buy-to-Let Debate’ in Westminster, hosted by Paragon Mortgages, the panel, comprising senior figures from the PRS and the lending industry, was asked whether it agrees with Government proposals set out in the White Paper and, by implication, if short-term tenancy agreements are unfair to tenants.
Whilst generally it agreed that Government promoting the availability and offer of longer residential tenancies in the PRS is encouraging, there was some debate around existing access and demand in today’s market.
Jeff Prestridge, Personal Finance Editor for the Mail on Sunday, said he agreed with the idea of offering greater longevity in tenancy agreements and – as a private tenant himself – would like to see three to five year tenancies.
However, David Cox, Managing Director of ARLA, disagreed: "If the market wanted long-term tenancies, it would have reacted", he said, arguing that tenants rarely walk into letting agents' offices and ask for three or five-year tenancy contracts. "There is a market, but it’s a small one", he added.
John Heron, Managing Director of Paragon Mortgages, offered balance but described a myth around long-term tenancies not currently being offered. He said that, in fact, several lenders – including Paragon Mortgages – went out of their way to accommodate long-term tenancies.
He said: "The reason they [long-term tenancies] are relatively uncommon could be to do with landlords not wanting to offer them, tenants not wanting to sign up to them, or the entrenched interests of the lettings industry."
The day’s keynote speaker was David Miles, CBE, of Imperial College London and ex-member of the Bank of England Monetary Policy Committee, who summed up the issue by highlighting a need to offer long-term tenancy contracts as well as, not instead of, short-term agreements.
"Who could be against more flexibility and removing obstacles that may exist?" He asked, "But there is a difference between giving greater flexibility and putting obstacles in the way of short-term tenancies."