Longer PRS Tenancies May Force Landlords Out Of Business

Thursday, September 18, 2014

Longer Tenancies May Force Landlords Out Of Business

Longer Tenancies May Force Landlords Out Of Business

Labour Proposal For Longer Tenancies May Force Landlords To Sell Up

New proposals put forward by the Labour party pushing for longer assured short-hold tenancies in the private rented sector could see PRS landlords selling off rental properties due to increased pressure put on them by their buy to let mortgage providers.

Many buy to let mortgages often include clauses that limit the length of time that an assured short-hold tenancy agreement can be granted for, limiting the length of the tenancy to a maximum of 12 months in order to protect the lenders ability to recover the mortgage loan.

The Labour proposal for longer tenancies is also in line with the current government’s thinking, as they are also looking at longer-term tenancies for the private rented sector. The Government have published a model tenancy agreement which can be used by letting agents and PRS landlordsThe current Government Housing Minister, Brandon Lewis, unveiled the model tenancy agreement at the RESI14 conference held in Newport, Gwent last week.

The tenancy agreement is available free of charge on the Communities and Local Government (DCLG) website and is 38 pages in total and includes landlords’ and tenants’ checklists, key dates in any tenancy, and the agreement in principle.

It also offers guidance on elements that are critical to lengthening the term of a standard PRS tenancy, as well as offering advice on how landlords should go about giving notice to tenants for grounds for possession and a possible break clause for landlord’s for the purpose of selling a rental property, and some suggestions about rent reviews.

Mr Lewis told the RESI14 conference that the government’s guiding principles were to make PRS tenancies, and many other measures for the private rental sector, voluntary rather than mandatory, as the vast majority of private rental sector landlords and their tenants behave honourably and had perfectly amicable dealings with each other throughout the length of a standard tenancy.

However, it remains to be seen how the proposals for longer tenancy agreements will be incorporated and regulated by buy to let mortgage lenders.

This was written by Mike Clarke. Posted on at 11:30 am. Filed under Buy To Let. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.