We are encouraged that the Government is promoting the availability and offer of longer residential tenancies in the Private Rented Sector (PRS) in their White Paper. Supporting the PRS as a long term option for rental customers is an important political statement in recognising that home ownership isn’t the one size fits all solution to the UK’s Housing Crisis. A multi tenure approach is the only practical solution for tackling the problem.
Existing legislation already enables three year (or longer) Assured Shorthold Tenancies (ASTs) to be granted by landlords – and indeed many of our existing long term corporate landlord clients already offer their customers longer term agreements if requested. Likewise, the benefit to the new wave of large-scale build to rent of longer term income with reduced vacancies and index linked rents is unlikely to make the offer of longer tenancies controversial.
We expect that a move towards promotion of longer term tenancies will not impact on what is a very functional and established market for residential investment properties. The Government’s preference for longer term tenancies is not mandatory on all landlords – and indeed is unlikely to affect the buy-to-let market which provides the vast majority of PRS stock presently.
Those with buy-to-let mortgages will likely be contractually restricted to offering one year tenancies as part of the obligations to their lender so are unlikely to be able to offer longer tenancies even if they wanted to. Equally, many individual investors enjoy the flexibility to theoretically obtain vacant possession relatively quickly and sell into the owner-occupier market should they so wish.
To conclude, we at Allsop see the build to rent market and traditional PRS markets as two very separate investment sectors. As the Government has identified, family friendly three year tenancies will compliment build to rent customer offering but, in our view, are unlikely to have a noticeable impact on traditional residential investment markets.
Notes to editor
Andrew joined Allsop from Chestertons in 2002 to head up the Allsop Leeds office. He is also Non-executive Chairman of the firm’s residential property management subsidiary, Allsop Letting and Management.
He has 30 years’ experience in all aspects of the residential investment and development markets. Has advised on a variety of major investment transactions including take-overs and stock exchange reporting. Day to day work includes the valuation of a variety of residential property and portfolios for loan security, tax, litigation and accounts purposes. Andrew also advises a number of student accommodation Funds on portfolio value.
You can contact Andrew for advice at firstname.lastname@example.org or call him on +44 (0)113 236 6670.
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