A new lease of life – that is what some renters feel they have been given, especially if they are looking for long-term tenancies after the Residential Tenancies (Amendment) (No. 2) Act 2021 “brought in tenancies of unlimited duration for tenancies created from 11 June 2022”. https://www.citizensinformation.ie/en/housing/renting_a_home/types_of_tenancy.html. The Act also stipulates that, if the tenancy was created before 11 June 2022, it will be valid for 6 years after the first 6 months of renting. At the end of the 6 years, unless the landlord terminates the tenancy for valid reasons, it will automatically become a tenancy of unlimited duration.
As the Sittingbourne letting agents will agree, this resolution definitely makes it seem that the UK is moving towards a more long-term tenancy model. There are some pros and cons to both sides – short-term and long-term tenancies.
- Fewer costs are involved with documentation, as one agreement can be drawn up for the long term, rather than renewing agreements every year or so.
- Time and money can be saved by not having to look often for new tenants.
- There will be an assured rental income, with fewer void no-income periods between tenants vacating and new tenants moving in.
- Tenants are likely to take more care of the property during the long haul, treating it like their own home, resulting in less repair and maintenance costs.
- These tenants will report issues with the property, which can soon be fixed before becoming major, costly issues.
- With long-term tenants, a rapport is usually established making it easier to solve problems that may turn up. Also, these tenants are more likely to make rent and other payments promptly, which ensures a steady cash flow and peace of mind.
- The tenants have a sense of security and less stress, knowing that they will not have to move out and look for new accommodation for some time.
- For the tenant, the rent is secure and can be budgeted for a longer period.
- There will be an improvement in the tenant’s credit rating.
- Frequent packing and removal costs will be saved.
- If the tenants are difficult, it may take longer to settle issues that crop up.
- While finicky tenants will probably take good care of the property, they may demand more from the owners.
- Rent: With new tenants, rents can be revised, but if there is a long-term tenant unless mentioned in the agreement, rents cannot be revised. Under the same Act mentioned above, annual rent increases for both new and existing tenancies in RPZs (rent pressure zones) “cannot exceed the lower of (i) inflation as recorded in the HICP and (ii) 2% per annum on a pro-rata basis.” For frequency of review of rents in areas outside RPZs, the current restriction to once every 2 years has been extended till 31 December 2024.
- If the owner needs to sell quickly, a short-term tenancy is better.
- Setting a rental for a new tenant is also advantageous.
- Short-term lets often attract higher rents.
- If a landlord plans to live in the property at a later date in the not-too-distant future, then a short-term tenancy is required.
- The location (especially for students) could result in high demand for short-term tenancies, giving the landlord a wide variety of potential tenants to choose from.
- For a person on a temporary posting or looking at staying for a short time, these tenancies are ideal.
- The more often tenants change, the more likely is damage and wear and tear to the property.
- The risk of vacant periods is increased.
- Usually, with short-term lets, landlords will have to pay bills like Wi-Fi, utility bills and TV licence, which long-term tenants would take care of.
- Short term lets include the provision of furniture, fittings and linen in good condition, which could add to costs.
Deposits and Advance Rent:
These have been restricted to one month’s payment towards advance rent and one month’s rent towards a deposit to secure a tenant. During the tenancy, landlords can ask for only one month’s rent in advance. Students have the option to pay in advance for more than one month if they wish.
Conclusion: Taking the above points into consideration, it does look like the UK is concentrating more on a long-term tenancy model. This is not only in order to protect tenants and their rights but also in an imperceptible way to take care of landlords’ interests as well. We hope that the “long lease” will prove beneficial to all concerned.