'Longer tenancies in the PRS would be excellent news for many.'
While the flexibility of short-term tenancies is welcome for many, others need more security, says CIH policy and practice officer David Pipe.
The government recently published a consultation on introducing longer tenancies for private renters.
That government are looking seriously at this issue is good news. The sector has grown dramatically since the 1980s and now houses more people than live in social housing. Along with this growth, there has also been a significant change in the types of household who are renting. Increasingly many are renting for the long term.
Some 38 per cent of private renters are families with children and, although the sector is often thought of as housing mainly younger people, the proportion of 55-64 year olds who live in the sector (10 per cent) has more than doubled since 2003/4. The proportion of 45-54 year olds (16 per cent) has more than trebled.
Realistically, many of these will never be able to access either social housing or home ownership. They deserve a greater degree of security than the six to 12-month tenancies currently on offer. Furthermore, government statistics show that the breakdown of a private sector tenancy has now become the single most common cause of homelessness.
In fact, this is not the government’s first attempt to get more landlords to offer longer tenancies. The White Paper published back in February last year suggested that the growth of ‘build to rent’ (purpose built housing for private rent, funded by institutional investors and often managed by social landlords) provided an opportunity to offer stability to more renters. It said that government would encourage ‘family friendly’ longer tenancies in that part of the sector.
However, build to rent remains a relatively small part of the market. To date 20,000 homes have been built under a government scheme to help fund this kind of development, with a further 100,000 currently in the pipeline. This is good news but with 4.7 million households renting privately, it is clear that for the foreseeable future the vast majority of private renters will still continue to rent from small scale landlords.
The new consultation is much bolder than the government’s previous plans. It suggests that they would like to see longer tenancies become the norm across the sector as a whole.
In summary, their proposal is a longer, three-year, fixed term. It would include a six month ‘break clause’, where either party could end the tenancy if there are problems. After the first six months, tenants would still be able to end the tenancy if they wanted to move but landlords would only be able to end it in certain circumstances. And landlords would also have to set out at the beginning of the tenancy how often and how much rents could be increased by.
The consultation also sets out a number of potential options for implementing the change. These are:
- making no legal changes but offering incentives to encourage more landlords to offer longer tenancies voluntarily
- making longer tenancies the ‘default’ option but allowing individual landlords and tenants to agree a shorter term when they want to
- requiring all landlords to use them by law with some specific exceptions (for example, student accommodation).
Interestingly the Scottish government has already gone further still and introduced indefinite tenancies, which can only be ended by the landlord in certain circumstances (for example if they need to sell the property, to move back into it or if there are rent arrears). Rents are not controlled but rent increases are limited to once a year and there is a mechanism for tenants to challenge these, if they feel that they are excessive.
At CIH we are considering the government’s proposals carefully. We are clear that, while the flexibility offered by the current system is valued by some tenants, there is a growing number for whom the constant insecurity is a major problem. While landlords do have a legitimate need to be able to recover properties quickly in certain circumstances, some change is clearly needed. It is vital that government gets the detail of their plans right.
David Pipe is policy and practice officer at CIH.
We are really keen to collect members’ views to inform our response to the consultation. If you are a CIH member there are a number of ways that you can help us with this: