Currently, there are no rules to prevent lenders or lenders from offering longer-term leases than typical one-year contracts. Simon Heawood, CEO and founder of Bricklane, called the decision to abolish three-year leases a “confused government turnaround.” Johnny Caddick, managing director at Moda, said: “We are investing more than $2 billion in construction rentals in seven UK cities, and I can assure you that the three-year lease offer does not bother us at all. Another problem is that the proposed longer-term leases may not meet the criteria of many mortgage lenders, which in most cases provide for a maximum 12-month agreement. An eight-week consultation on the plans was launched in June. Under the proposals, landlords would have to offer leases of at least three years with a six-month break clause, but tenants would have the option to move earlier if they wished. The survey showed that 30% of tenants want leases to last 12 months, and an additional 20% want leases to last no more than two years. Will Bartley, a dispute resolution lawyer, commented: “As a result of these changes, many investors have stopped expanding their portfolios or leaving the industry altogether. The introduction of these three-year minimum periods could speed up this process. While it improves the status quo for tenants, it could mean that the rental market offers a few contracts, offers less choice to tenants. An NLA survey of tenants showed that 40% of tenants want longer tenancy contracts, but not 40%.
More than 50% said they were satisfied with the proposed rental term, and 20% told the NLA that when they asked for a longer rent, they got it. A six-month break clause was proposed to allow tenants and landlords to withdraw prematurely from the contract. Andrew Montlake, director of broker Coreco, said: “In my experience, there are many homeowners who would like to have longer rental lengths for their good tenants, but who are bound by the requirements of mortgage lenders, who traditionally don`t like more than a year AST. Mark continues: “In addition, rent increases can be capped or excluded over a three-year period, which gives tenants greater visibility of their future expenses, but can lead to landlords being taken out of pocket when mortgages increase.” “We caution against the legal obligation to introduce three-year leases.” But there seems to be a possibility, although it is not clear at this stage that tenants can take a rental break, inform landlords before the end of the three-year period, which means that their minimum rent can be up to two months, which would result in landlords. 6 months then periodic statatory always occurs works, both sides remain protected.