Almost one third of landlords say they would be less likely to purchase new rental property if compulsory or default three-year tenancies were introduced, according to a study by Paragon.
In its PRS Trends research, the bank surveyed 200 landlords following the government’s recent consultation, ‘Overcoming the barriers to longer tenancies in the PRS’.
When asked if the introduction of a compulsory three-year tenancy would make them less likely to consider certain tenant types, 36% of landlords said they would be more likely to consider older couples, followed by retired people (29%), families (25%) and older singles (25%).
Interestingly, landlords felt a compulsory three-year agreement could potentially make them less likely to consider mobile and itinerant groups, including students (45%), migrant workers (40%) and young singles (24%).
Having updated its mortgage conditions to facilitate longer term tenancies back in 2014, Paragon continues to encourage greater security for tenants. Today, many of the biggest lenders in the buy-to-let sector support landlords offering tenancies up to three years in duration.
John Heron, director of mortgages at Paragon, said landlords are highlighting that the diversity of the tenant population calls for diversity of tenancy agreements.
“While some groups value greater security, many other tenants favour flexibility. Young professionals, for example, value the flexibility that the PRS brings to move to different areas and to different types of property,” he explained.
“In light of these findings, rather than impose longer-term tenancies as the primary or default arrangement in law, it may be preferable to bolster tenants’ rights to choose from a range of different tenancy lengths and boost incentives to landlords to enter long term arrangements where requested.”