Tenancies for longer than the usual six to 12 months are becoming more popular among tenants, a growing number of letting agents report.
But landlords who go down this route can benefit, too.
Students, especially from overseas, welcome three-year tenancies because of the stability this brings. It is often welcomed by their parents too, who may well be financially supporting them.
The growth of house prices also means more and more private renters are bringing up children without buying their own home, according to the English Housing Survey (CHECK).
Parents want to know that they will not have to change their children’s nurseries or schools by having to find a new rental property once or twice a year.
Longer term tenancies
According to research from the National Residential Landlords Association (NRLA), a massive 63% of tenants would like a longer tenancy.
And reports from housing charity Shelter say that four out of 10 landlords would be happy to offer this. That figure rises to almost eight out of 10 if a break clause can be included in the contract.
This chimes with government thinking – as far back as 2018, it was consulting on barriers to long-term tenancy “with the aim of providing greater certainty and a more secure environment for both landlords and tenants”.
The consultation suggestion was to move to three to five-year tenancies with a six-month probation period where either side could change their mind.
Worried landlords can be assured that longer-term tenants don’t accrue any more rights than shorter-term tenants.
Why they attract good tenants
Offering a longer-term contract makes good financial sense for both sides. Tenants who feel their property is their proper home for a long time will look after it better.
They will feel confident they can live there for a while, and this makes them more willing to invest in the property.
They are often keen to change curtains, add accessories and redecorate tooms – with their landlord’s permission, of course – to make it feel more “theirs”.
When they feel they have a greater stake in their home, they are likely to maintain it well, keeping it clean and in good order.
Wear and tear – which is something landlords cannot take from the deposit – is likely to be minimised.
They also have a much stronger incentive to report problems as soon as they happen, rather than let damage – for example, from leaks – build up.
Longer contracts promote better relationships between landlords and tenants – partly because they have more time to get to know each other, and each other’s needs.
A short let means that tenants naturally become worried they may have to soon find another place. They may look around for other properties, and there is always a chance they will see something they prefer.
However, a let of several years will almost certainly stop them from shopping around.
Neighbours will be happy
Neighbours will be happy too, as they will prefer people they can get to know, rather than a constantly changing stream of tenants.
Void periods between tenancies are a real bugbear for landlords, as the process of re-advertising, checking and referencing tenants, and then waiting till they can move in, can mean weeks of having no rent.
In the past, some mortgage companies have felt unhappy about lending on longer tenancies, but attitudes are changing and lenders are likely to be much more flexible nowadays.
Some landlords are happy to offer their properties at the same rent for several years instead of incurring the cost of voids.
However, there is nothing to stop them raising rents annually if they wish. Putting in break clauses can also help both sides – tenants’ circumstances may change, or landlords may need their investment back to sell or to live in themselves.
All these issues can be addressed by a good letting agent, who will help you work out the best strategy. Here at Dreytons, we can offer an extra piece of help.
Our guaranteed income means you will receive rent every month for one to five years, and we can manage the whole process from securing your tenants to managing all the paperwork.
This leaves landlords free from hassle, and we can get your property producing an income fast.