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Proposed Tenant's Charter

A recent rise in the number of people renting their homes has led to a call for a change in the types of tenancies that are on offer. In October Communities Secretary Eric Pickles proposed a tenant’s charter in order to raise the quality and variety of rental accommodation, which he hopes will eliminate any rogue landlords and agents from the fold. One aspect of the proposed charter is to allow tenants to request tenancies that last from 2-5 years rather than the standard 12 to 18 months. There are numerous benefits to this, namely that the tenant has a similar security to if they owned their own home and could avoid a jump in rental costs that could occur at the end of the tenancy. This type of tenancy would be ideal for the estimate of 1.3m families who are renting and require security for their home. However, longer tenancies could have further repercussions further down the line with issues including SDLT for tenants as well as depleting rental stock. Stamp duty is payable if the value of a tenancy is not worth more than £125,000. For a one year tenancy at £700 p/w this would not be an issue as the rent would annually be £36,400. However if this was stretched to a five year tenancy the total value of the tenancy would be £182,000 which would be over the SDLT threshold and the tenant would be responsible for the costs. Those pushing for the tenant's charter have argued that that longer term lets will suit tenants and landlords alike as landlords will be able to maintain reliable tenants and avoid periods when their property is empty. The government have stated that in order to make the tenant's charter work, they will be in talks with buy-to-let lenders to remove any obstacles that might affect the charter, as many lenders including Halifax and Virgin Money restrict tenancies to twelve months. In June The Mortgage Works, part of Nationwide building society changed its policy and begun to allow longer term buy-to-let mortgages of up to three years. To find out how these issues might affect you and your tenants, or ask for advice regarding any changes in tenancies please contact our lettings team on 020 7240 3337

A recent rise in the number of people renting their homes has led to a call for a change in the types of tenancies that are on offer.

In October Communities Secretary Eric Pickles proposed a tenant’s charter in order to raise the quality and variety of rental accommodation, which he hopes will eliminate any rogue landlords and agents from the fold.

One aspect of the proposed charter is to allow tenants to request tenancies that last from 2-5 years rather than the standard 12 to 18 months. There are numerous benefits to this, namely that the tenant has a similar security to if they owned their own home and could avoid a jump in rental costs that could occur at the end of the tenancy. This type of tenancy would be ideal for the estimate of 1.3m families who are renting and require security for their home.

However, longer tenancies could have further repercussions further down the line with issues including SDLT for tenants as well as depleting rental stock. Stamp duty is payable if the value of a tenancy is not worth more than £125,000. For a one year tenancy at £700 p/w this would not be an issue as the rent would annually be £36,400. However if this was stretched to a five year tenancy the total value of the tenancy would be £182,000 which would be over the SDLT threshold and the tenant would be responsible for the costs.

Those pushing for the tenant's charter have argued that that longer term lets will suit tenants and landlords alike as landlords will be able to maintain reliable tenants and avoid periods when their property is empty.

The government have stated that in order to make the tenant's charter work, they will be in talks with buy-to-let lenders to remove any obstacles that might affect the charter, as many lenders including Halifax and Virgin Money restrict tenancies to twelve months. In June The Mortgage Works, part of Nationwide building society changed its policy and begun to allow longer term buy-to-let mortgages of up to three years.

To find out how these issues might affect you and your tenants, or ask for advice regarding any changes in tenancies please contact our lettings team on 020 7240 3337

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