Tenants: in it for the long haul
Despite the common rhetoric that renting is great for flexible living and flighty lifestyles, the latest English Housing Survey (EHS) – which represents the biggest and most representative dataset for the private rented sector – showed that average tenancy lengths are rising.
The average stay in a rented property is now 4.3 years. This is up from 4.1 years detailed in the 2017/18 EHS, and up from 3.9 years in the 2016/17 version of the report. The findings also reveal that tenancy length increases with age. Renters aged 75 and over were found to have an average tenancy length of 17.5 years, which puts their tenure on a par with owner occupiers. Those aged 45 to 64 were found to live in one property for an average of 5.7 years, while those in the 16 to 24 age group stayed the shortest time – an average of 1.3 years.
The figures come at a time when the Government looks set to publish its Renters Reform Bill white paper – a document that seeks to shake up England’s private rental sector in favour of creating secure long-term tenancies. While the white paper mentions lifetime deposits and a ban on Section 21 ‘no fault’ evictions, it stops short of introducing mandatory 3-year tenancies – a move it consulted on in 2017.
That doesn’t mean to say that the notion of long-term tenancies is abandoned or is a bad idea. On the contrary. For many landlords, the thought of a regular tenant is an appealing one, especially if they pay the rent on time and look after the property. There is always the option to set longer tenancies at the start, rather than keep renewing the same tenancy after 6 or 12 months.
Agreeing a tenancy length of 2 or 3 years will reduce the ‘churn’ of renters and eliminate void periods. Longer tenancy lengths can also save landlords money, as there are fewer tenant-find, inventory and check-out costs to pay. In addition, well-managed, long-term tenants are a great way to earn passive income – especially when a property manager takes on the day-to-day running of the tenancy.
Creating a tenancy agreement of more than 12 months does, however, need a well-planned approach. Choosing to have the agreement professionally drawn up and the tenancy managed by an agent is the safest way to ensure everyone enjoys maximum protection. This is especially pertinent for landlords in light of forecast changes to the evictions process, of which we can explain more when you get in touch.
Three essential considerations for long-term tenancies:
- Evaluate risks at the referencing stage: when agreeing to a longer tenancy, it is imperative that the very best tenants are placed in the property. Referencing will identify those who have good credit histories and are in secure employment. Crucially, references will reveal if applicants have been model tenants when renting before.
- Ask for a break clause to be added to the agreement: if the security of a long term tenant appeals and makes you nervous in equal measure, ensure there is a ‘break clause’ inserted into the tenancy agreement. A break clause gives the landlord, or the tenant, the right to end the tenancy before the fixed-term period ends.
- Ensure inspections are carried out regularly: it’s easy to cultivate a false sense of security when you have long-term tenants who pay the rent promptly. Knowing how your buy-to-let is being treated over the years is imperative to protect the property’s value and to catch small niggles before they turn into major problems.
We can help landlords plan for their buy-to-let’s future, advising on the best tenancy duration based on individual aims and circumstances. Get in touch with us today.
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