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The Government to review terms of tenancy agreements.
The government has announced that it is to hold a consultation to consider changing the terms of a tenancy agreement making the shortest tenancy 3 years with a break clause of 6 months.
The logic is that it is unfair should a tenant have to move due to the term of the rental contract especially when they have children?
Under the new proposals, the tenant would be able to leave before the end of the agreement but would have greater protection should they want to stay.
Labour plans to go further with protection against eviction and controls on rents.
A concern is that the government seems to be imposing so many taxes, benefit caps, legislation changes on to landlords that it will not become a viable business and fewer and fewer properties will be available to tenants driving prices up (subject to Labours rents controls).
Many people point to Europe as a model where tenancies tend to be longer but that’s just part of the picture as evictions are easier, the tax breaks given to landlords are much better with most countries still allowing mortgage interest deductions before tax and very attractive capital gains tax allowances.
3-year minimum tenancies will force landlords to look even closer into the tenant they take in the first place, meaning those in a poorer credit score position could struggle to find a property, these are the people that any change is designed to protect.
The average term for a tenancy is 4 years in the UK, but some people wanting short tenancies; workers and students may not need a 3-year agreement.
The government need to be aware that they are penalising this industry and all the pro-tenant legislation can easily backfire, whilst protection for tenants and the minimum standard should be enforceable, so should encouragement for investors to invest in rental property, with interest rates set to rise and property prices set to fall the future is uncertain.
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