Would extended tenancy agreements work in Northern Ireland?
Posted on 02 July 2018
News has broken that the government proposes to introduce new legislation for renters. The proposal relates only to England, but is likely to have some sort of impact on the rental market in Northern Ireland if it is introduced.
Figures show that 80% of tenancies agreements are for an initial term of 6 to 12 months, but the main thrust of the new proposal would be to allow them longer agreements so they could put down more roots.
They say that this would provide landlords with more financial security, which is true, but confusingly they go on to add that tenants would be able to leave early under these plans. This makes the proposed new tenancy agreement very one sided allowing the tenant to leave early should they wish, but not allowing the landlord to end the agreement early should the need arise. I don’t really see how a longer tenancy that the tenant could choose to end early provides more financial security for the landlord.
Under the present system, there is nothing to stop a tenant and a landlord agreeing a much longer contract if it suits both parties. Very often the flexibility of a shorter contract suits both parties equally.
Shadow Housing Secretary John Healey has suggested that the new proposals would be meaningless “if landlords can still force tenants out by hiking up the rent.” This could be easily solved by including a requirement for landlords to prove that any rent increases are in line with the local rental market, as is the case currently with commercial tenancy agreements.
Perhaps making residential tenancy agreements closer in tone to commercial ones could be the answer.
The initial term could be agreed with no upper time constraint if that suited both parties. A yearly percentage increase in rent could be included with the ability to review both the rent and terms of the agreement either at the end of the initial term or during pre-agreed break clauses.
If the landlord wanted to increase the rent at the end of the agreement, or during a break clause, they would need to offer evidence that the current rent was out of step with other rental values in the area. If the two parties could not agree a Chartered Surveyor could arbitrate.
The legislation would need to include conditions under which either party could end the agreement early, for example a significant change in their financial circumstances, but these would need to be evidenced, with swift and binding arbitration procedures available should the parties be unable to agree.
The consultation on these proposals for minimal tenancy terms will run until the end of August. It will be interesting to see what this process produces and what impact it will eventually have on tenants and landlords in Northern Ireland.
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