One of the ‘problems’ with the private rented sector is the shortness of the average fixed term – six months or a year.
Six months, it is held (rightly) is not really long enough for someone to become part of the local community. Children suffer if they have to keep changing school through their parents moving due to insecure accommodation, and fees and removal costs make frequent moves an expensive exercise.
All that is very true. However, it is not the whole picture. Let’s take a look at some of the issues.
From the Landlord’s Point of View
The sad fact is that some tenants are problematic. For example:
- They may run up serious rent arrears
- They may not look after the property properly
- They may cause problems with other tenants (particularly if the property is a shared house or flat)
These are not really things you can expect a landlord to put up with long term.
The trouble is though, there is not really much, if the tenant fails to respond to requests to deal with the problem, a landlord can do other than evict.
For example, going around and shouting at them or cutting off services will be treated as harassment which is a criminal offence – and will also entitle the tenant to claim compensation.
The ‘blunt instrument’ of eviction is often the only real solution to the problem of a tenant who will not change his or her ways.
The trouble with THAT is that for two of the issues in my list above, it is going to be very difficult to evict other than via section 21. And section 21 can only be used after the fixed term has ended.
Even if the tenant is in arrears of over two months / eight weeks rent which allows the landlord to use the mandatory rent arrears ground (which can be used to evict a tenant during the fixed term) – tenants can delay things by putting in ill founded (or maybe even fictitious) defences. Or can prevent the landlord from using the mandatory ground altogether by bringing the arrears to under two months.
The type of landlord
How a landlord views non-paying tenants will often depend on what type of landlord they are. Professional portfolio landlords are often less bothered about tenants who pay irregularly so long as they pay in the end, and may be prepared to allow them to stay.
However small landlords with one property will not want the additional hassle of dealing with non-paying tenants – particularly if they are heavily dependant upon the rental for their income, e.g if they are pensioners.
Long terms and agents fees
Another problem I have seen is where letting agents persuade new landlords to grant a new tenant a long fixed term because it will give them more ‘security’. They then take their commission for the whole 2, or 3 years or whatever from the initial rent.
The tenant then falls into arrears or proves unsatisfactory in some other way and the landlord is left to deal with it.
For example, I can remember one case where the tenant was signed up for two years and paid six months rent in advance A substantial part of which went to the agents for their fee for two years commission up front.
However, after the six months had passed the tenant failed to make any further payments. The landlord was able to recover possession of the property from the tenant (after incurring legal costs and five months without rent) but not, of course, the commission from the agents.
From the tenant’s point of view
The other question is – do tenants actually want to be tied into long fixed terms?
Some do – for example, families with children who need to be near schools. But others definitely don’t. For example
- They may want the flexibility of being able to move elsewhere for their work
- They may find issues with the property and want to move out
- They may find somewhere else they would rather live, or maybe want to buy
Several surveys (admittedly often carried out by landlord organisations) have shown that there is no strong demand among tenants as a whole for long fixed terms.
The problem is that you cannot generalise and what is good for one person is bad for another.
Some people enjoy the flexibility and freedom that rented property gives. Others would rather stay and put down roots.
There is also the big problem that unless there are serious rent arrears, the only reliable way to evict is using section 21 – which cannot be used during a fixed term. This reason alone makes it inadvisable for landlords to ever grant a fixed term of over 12 months.
For HMO / shared house situations where one bad tenant can create misery for everyone else, fixed terms should never be more than six months and it may be best to allow them to run on as a periodic after the initial fixed term ends.
Finally, there is the fact that we have a shortage of good housing generally which creates its own problems – in particular giving power to bad landlords whose tenants are desperate to remain only because there is nowhere else for them to go.
My personal view is that now is not the time to introduce mandatory longer tenancies, if indeed there will ever be a time. The real problem in the private sector today is the shortage of suitable housing – which is the subject of separate articles on this blog!