The pros and cons of longer tenancy lengths
Results of the latest English Housing Survey (EHS) have brought the issue of long-length tenancies back into the spotlight. While the idea of making 3-year tenancies mandatory was abandoned by the Government in 2019, following an extensive consultation, the survey results have highlighted how renters are choosing to stay in the same rental property for extended periods.
The EHS found the new average stay in a privately rented property is now 4.3 years – surpassing the three-year benchmark that was widely rejected as a mandatory term. It’s a trend that has been building for a number of years, with the average tenancy length rising from 3.9 years in 2016/17 and 4.1 years in 2017/18.
The findings may prompt more landlords to consider offering longer-term tenancies but there are pros and cons to weigh up when it comes to offering rental agreements of more than 12 months. Here’s our quick-read considerations guide but for tailored advice, please contact our lettings team.
- Void periods are reduced: any void is a drain on finances so reducing the number of times you have to find new tenants – a process that may potentially leave a let empty for a week or two – is a good thing. A long-term tenant also ensures rent is always hitting your bank account every month.
- You’ll generate a ‘hands off’ investment: long-term tenants are a great option for landlords who like as little involvement in their buy-to-let as possible. There’s less worry about renewing tenancies, finding new renters, check ins, inventories and check out, plus landlords who opt for a fully managed package can really sit back and enjoy the rewards.
- Tenants will reward you with respect: tenants who feel secure in their rental generally feel more positive about the experience. They will be keen to create a home they can settle in, and anecdotal evidence suggests they look after the property better and forge good relationships with the landlord or property manager.
- Regaining possession may be harder: currently, landlords can serve a Section 21 ‘no fault’ eviction notice after a fixed term tenancy ends. If the agreement is only for 6 or 12 months, regaining possession doesn’t pose too much of a problem. If the agreement length is two or three years, landlords may have to wait an untenable amount of time. One workaround is to insert a break clause into long-term agreements – something we can organise on behalf of landlords.
- You’ll have to trust your tenants: when the same people live in your let for 2 or 3 years, you’ll have to trust that they’ll take care of the property and pay the rent on time, especially if the eviction process will favour the tenants more in the near future. Referencing carried out by a letting agent is the best line of defence. It will uncover an applicant’s past renting behaviour and reveal their financial situation, allowing the most trustworthy tenants to be chosen.
- Rent reviews will need careful planning: it’s a wide-held but unwritten rule that landlords reward long-term tenants with fair rents that aren’t hiked up overnight. If you’re used to raising the rent every time new tenants sign up – perhaps as often as every 6 months – you’ll need to plan a rent rise strategy before you move in long-term tenants. Always consult with a letting agent and consider writing any plans into the tenancy agreement.
Speak to us about setting the right tenancy agreement length for your property, your target tenant and the current lettings market. We will create the perfect tenancy agreement that factors in break clauses, rent rises and notice periods.
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