The latest research from Paragon has found that a third of landlords are less likely to buy property if three-year tenancies are made compulsory under new government proposals.
According to the report, 32% say they would be less likely to expand their portfolio further should government press ahead with compulsory or default three-year tenancies.
Paragon surveyed landlords on the issue to gain a deeper understanding of their views following the government’s recent consultation, ‘Overcoming the barriers to longer tenancies in the PRS’.
Asked if the introduction of a compulsory three-year tenancy would make them more or less likely to consider certain tenant types, the highest proportion of landlords said they would be more likely to consider older couples (36%), retired people (29%), families (25%) and older singles (25%).
Interestingly, landlords felt a compulsory three-year agreement could potentially make them less likely to consider mobile and itinerant groups, including students (45%), migrant workers (40%) and young singles (24%).
Paragon has consistently supported greater security for tenants who desire it and was one of the first lenders to update its mortgage conditions to facilitate longer term tenancies back in 2014.
Working in concert through the then Council of Mortgage Lenders to co-ordinate action across the lender community, significant change was achieved and today many of the biggest lenders in the buy-to-let sector support landlords offering tenancies up to three years in duration.
John Heron, Director of Mortgages at Paragon said: “Landlords are highlighting that the diversity of the tenant population calls for a diversity of tenancy arrangements. While some groups value greater security, many other tenants favour flexibility. Young professionals, for example, value the flexibility that the PRS brings to move to different areas and to different types or property.
In light of these findings, rather than impose longer-term tenancies as the primary or default arrangement in law, it may be preferable to bolster tenants’ rights to choose from a range of different tenancy lengths and boost incentives to landlords to enter long term arrangements where requested.”