How long should your tenancy agreement be?
You may have seen the press coverage and political debate about what is the appropriate length for a fixed term tenancy and whether there should be a legal requirement for them to be a certain minimum length and it’s certainly an important consideration for any landlord.
Tenants often make a compelling case for a long term agreement in terms of an improved sense of security and feeling of being settled as well as saving the hassle and cost of moving on. And of course, from a landlord’s point of view the idea of 3 years’ worth of rent guaranteed and none of the hassle of finding new tenants can seem extremely appealing.
So what counts as a long term tenancy agreement and what’s wrong with them?
Although there is no precise definition of a long term tenancy, and it could really mean any tenancy longer than a year, it is generally accepted as being a tenancy of 3 years or more. But is that so very bad? Well yes and here’s why:
- If something goes wrong it will be much harder to evict your long term tenant
The easiest way to evict a tenant is by way of a Section 21 notice which means that as a landlord you do not renew the tenancy at the end of it. But if your tenant is not proving to be ideal and you need to evict him, 3 years can be a very long time to wait. The alternative is to issue proceedings by way of a Section 8 notice for breach of the terms of the tenancy (if there has been a breach) but unlike a Section 21 notice, a tenant can dispute a Section 8 which can result in delays, costs and a lot of hassle with no guarantee of an eviction at the end of the process.
- It’s not the guarantee you may think it is
3 years is a relatively long period and a lot can change in that time. Tenants can get divorced, lose their job, lose their entitlement to benefits or government policy can change and what once was a desirable and reliable rent prospect suddenly falls into arrears or wants out, and that brings most landlords a whole lot of hassle and hard work, not to mention possible financial losses.
- You’re stuck with the terms
It is very difficult to vary the terms of a long term tenancy so you may find you are stuck with a fixed rent despite external factors which mean you need to increase it, such as inflation or changes in government policy. And that of course could leave you very badly out of pocket.
What’s the best length for a tenancy ?
At EweMove we only recommend a 6 month tenancy agreement for all the above reasons. There is no harm in looking for a long term tenant and re-assuring all potential tenants that that is what you are looking for. But a 6 month tenancy gives both you and your tenant the opportunity to get to know each other (and from your point of view) discover how reliable a tenant they really are. And if it all goes horribly wrong, it is reasonably easy to end the tenancy and move on.
Graham Faulkner is Branch Director of EweMove Dorking and he’s also a portfolio landlord himself, as well as specialising in helping other landlords. So if you have any questions, why not give him a call. Apart from his own experience and expertise, he can also recommend the right professionals, as tried and tested by him, to advise you.
Enquiries to 01306 406 506 / 01372 701 702, or via email to dorking@