Home sweet home

According to the national press, the great majority of people dream of being homeowners and hate being tenants. I don’t believe that this is true and by perpetuating this myth, we avoid facing up to the real issue which is that the standard Assured Shorthold Tenancy (AST) agreement does not serve the needs of either tenants or landlords.
What many tenants are crying out for is a longer tenancy agreement and the right to make their property into a proper home during the period that they live there.

Many landlords are on the same page as their tenants; they would very much like to enjoy the security of a guaranteed income from a good tenant for a longer period of time, without worrying void periods and they are frustrated that they remain responsible for every minor repair.

Despite this, most ASTs are for just six months. Other countries do this far better than we do. For example, in Italy, the standard tenancy contract, the Contratto Libero, is for four years with an option to renew for four more. As a consequence, it is not uncommon to find tenants who have happily rented the same property for their entire lives. They have often redecorated to their own taste and even installed new kitchens and bathrooms because they know that they will be there for long enough to enjoy them.

THE ISSUE
In the UK, whilst leases on shops and offices are granted on this basis, it is almost impossible to rent a property for more than three years. At first glance, it seems strange that the market cannot offer new contracts when both tenants and landlords want them but in fact the obstacles to doing so are formidable.

These obstacles include:
1 Many mortgage lenders will not allow a property to be let for more than three years.
2 The maximum term of an AST is three years and most landlords and their solicitors are reluctant to use
non-standard contracts.
3 The UK market still has very few institutional landlords who would be more open to the idea of longer term contracts than individual investors.
4 Landlords are reluctant to pay letting agents a fair fee for arranging a longterm residential tenancy.

View the rest of this story that appeared in Property Drum here

Appeared – MARCH 2014 PROPERTYdrum