What are the benefits of longer tenancies for landlords?
Published: by John Bibby
Over the course of our campaign for the introduction of longer tenancies a number of landlords have got in touch with us to explain why they support giving renters more security. This post outlines the benefits to landlords of longer tenancies.
There is a growing need for longer, more secure tenancies in the private rented sector. More and more private renters are bringing up children or growing old in a rented home and they need to be confident they’ll be able to stay their home for the long term.
This need currently isn’t being met by a rental market which has struggled to keep up with the changing nature of who rents.
But it isn’t just tenants that support the introduction of longer tenancies: a large number of landlords also support their use. Our research shows that around a third of landlords like the idea of 3-5 year tenancies, where the tenant has a break clause. A further third say they are open to the idea.
This isn’t only because these landlords want to ‘do the right thing’. Longer term arrangements make good business sense too. We spoke to a number of the landlords who got in touch to say they support the campaign to understand what the benefits for them are.
A tenant who cares about their home
“…there’s a mutual interest in the upkeep of the property… Tenants who can feel the property is their proper home for a long time, and that the some of the rent they pay will go towards repairs and maintenance are far more likely to look after it well.” – Maureen, who has been a landlord for twelve years.
When people feel they have a stake in something, they are more likely to look after it. This can minimise costs for landlords in a number of ways:
- Tenants who invest in the property – if a tenant is confident they are going to live in a property for the long term they can be more willing to invest in the property by redecorating or buying furniture. For example, when we spoke to renter Suzie recently, who rents her home on one of the government’s model tenancies, she told us that getting a longer tenancy gave her the confidence to redecorate the property, including repainting a room and replacing some curtains
- Tenants who take steps to minimise wear and tear – landlords can’t deduct from a deposit for wear and tear. While wear and tear can’t be eradicated, a careful tenant who is expecting to stay in their property for a long time can minimise it. For example, things like not wearing shoes inside can extend the life of carpets.
- Tenants who report problems as soon as they occur – problems like leaks can spiral and become much more expensive to fix if they aren’t dealt with quickly. A tenant who is confident they are going to live in a home for the long term has a much stronger incentive to work with the landlord to fix it, than one who feels that they may imminently need to leave.
Fewer void periods
“Having long term tenants provides me with security. Knowing that my property will be occupied for the foreseeable future means I don’t risk any chances of sitting on a costly empty property.” – Hugo, who has been a landlord for three years
A quarter of tenants moved home in just the last year. This high churn is a problem for tenants, who pay high moving costs and feel the effect of instability. But it’s also a problem for landlords, because an empty home doesn’t generate any income and paying an agent to find new tenants can be costly.
It might be argued that short term contracts don’t contribute to this churn – that they allow for tenants to stay for as long as they and the landlord want. But I can tell you from personal experience: when you’re on a six month or one year contract, it’s only natural to start to look around as you approach the contract term, because there is a risk you may be forced to move anyway.
We’re familiar with this in other areas of the economy. If you’re an employer with a temporary member of staff you want to keep, you’d think of offering them a longer contract. That way they’d be less likely to look around for something else. The same thing applies in rented housing.
A better relationship between landlord and tenant
“It also means you can develop a relationship and build trust with your tenants, not having to start again and thinking ‘are they going to be okay?’” – Ruby, who has been a landlord for seventeen years
Finally, the landlords we spoke to said they thought having longer-term, more secure tenancies promotes better relationship between landlords and tenants. In part, this was about the duration of the relationship and getting to know their tenant.
But it was also about the power dynamic underpinning the relationship. Our research has found that 43% of renting families worry about losing the home they currently live in.[1] It is very difficult to build a positive relationship with your landlord if you are frightened of being evicted by them.
These conversations with landlords have given us a valuable framework for understanding the benefits of longer tenancies from their perspective. We now plan to do further research to quantify each of these benefits and will publish our findings here when we have them.
[1] YouGov for Shelter; base: 784 private renters with children in household, England, July 2015, online, weighted.