By Steve Roulstone
I posted a Blog a couple of weeks ago about what encourages a Tenant to stay longer in property and the answer both backed by the facts about the length of time our Tenants stay and what the Castle Estates group confirm, is the need for them to have confidence in their position. This involves allowing them to have control of their agreement by NOT being tied down to a new agreement every year.
Reasoning.
It is worth repeating quickly what this means. Tenant’s who are asked to sign a new agreement every year, are by doing so actually being asked a simple question – Do I want to be tied down for another year? In effect, they have their flexibility taken away from them. Instead what we believe in is allowing the contract to role on month by month (Periodic) and handing the control (when they wish to give notice) over to the Tenant. The actual reality is that Tenants stay longer when they do not feel pressured.
Shelter proposal.
Shelter feel that the market needs a five year agreement and I agree with William Jordan of Jordans Rentals (in his piece in Property Drum) that Shelter are approaching the issue from the wrong point. I do not know many Tenants who would agree to sign a five year agreement; in fact I would never recommend advertising a property as available on a five year agreement as it would greatly reduce the interest. What Shelter has missed is that it is not security people wish for, it is flexibility!
Moving on.
It is because Tenants want to be able to move when it suits them, not the opposite and as for Landlords giving Tenants notice to sell the house etc, well it is my experience that this happens very infrequently. Rather, it is when a Tenant gives notice in by far the majority of cases that a Landlord may make a decision to remove the property from the market. Also, it cannot be forgotten that we act for Landlords as their agent and this is a legal fact that cannot be ignored. But if a Tenant wanted a five year agreement and the Landlord was happy, this can already be arranged by using agreements available now, so why change?
Fees.
But there is another area which I alluded to in my original post which also needs to be addressed and this is where Shelter has a point. Too many Agents use the new agreement stance as an income stream by charging the Tenant for every new agreement signed. This has three real time implications. Firstly, they are taking advantage of the Tenant and reducing their upfront Landlord fees. OK for Landlords, but, Secondly, this gives credence to the Campaign waged by both Shelter and CAB to remove all Tenant fees (as, may I remind everybody, is already the case in Scotland) and long term will not do Landlords any favours, just to take short term advantage of Tenants.
Landlords pay costs.
Thirdly, by allowing Tenants to stay under a periodic agreement resulting in Tenants staying longer in the house, in reality, if (and when) a Tenant leaves because of being asked to sign a contract extension, it is the Landlord who is put at risk in having an empty property between Tenancies and losing out on rent, even if this is only for two weeks between Tenants!
Conclusion.
These are the reasons I put to why Shelter are approaching the matter from the wrong end, systems develop and patterns emerge because of the way the market takes them – market forces at work. That some see an opportunity to take advantage is, in my humble opinion, what needs to be dealt with here. Agents can be accommodating and property is available already long term and we are of course asked the question at times, but in reality, flexibility is the answer, not longer agreements.
There is more to follow on this subject and I will be adding to and commenting on what is currently a very live debate very soon!
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