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Do tenants really want long-term contracts?

Posted on 2016-02-08

Ideal tenancy durations and contract lengths are a complicated issue. There are pros and cons for both long and short-term tenancies and it's hard to determine if the average tenant prefers one or the other.

From a landlord's perspective, the perceived wisdom is that longer tenancies are better as void periods are minimised – but this is neither here nor there for the tenant and their expectations.

In the run-up to the 2015 General Election, the Labour Party proposed mandatory minimum three-year tenancies as part of its manifesto.

This idea was intended to offer tenants and landlords 'more stability', but allowing them the option to terminate contracts early as they can with the six to twelve month tenancies most renters currently have.

There was little evidence to suggest, however, whether tenants were for or against this possible measure.

On the other side of the spectrum, we're also often told that today's tenant enjoys the flexibility of renting and the prospect of being able to change homes frequently.

So are the UK's tenants becoming long-term life renters like many of their European counterparts, or are they looking for a short-term housing solution?

To determine the current situation and make sense of this issue it's best to hear from the tenants themselves.

Two studies recently carried out spoke to thousands of tenants about their views on tenancy lengths and here's what they had to say…

The Deposit Protection Service (DPS) surveyed almost 40,000 tenants and found that over 80% prefer tenancy arrangements which last no longer than 12 months.

A higher percentage, almost 90%, said they actually preferred agreements that last up to two years.

Meanwhile, only 35% indicated that they wanted a contract of six months or less.

“This survey suggests that the idea that tenants crave longer tenancies is a myth,” observed Julian Foster, DPS Managing Director.

“Like landlords, many tenants prefer the flexibility provided by shorter tenancy agreements rather than being locked into long commitments over where they live and who they rent from.”

He added that it's critical for tenancy agreements to reflect the needs of both landlords and tenants.

The DPS' survey also found that around 70% of participants preferred a rolling contract of one or two months' notice at the end of their tenancy, rather than a new fixed-term contract – which 28% of respondents said they preferred.

The other study, which was carried out by YouGov on behalf of Knight Frank, asked 5,000 tenants what duration of tenancy agreement they prefer.

The results showed that a narrow majority favoured a six month or annual tenancy.

Broken down, 69% of 18-24 year-olds surveyed said they would prefer a tenancy agreement of up to a year, while 61% of 25-34 year-olds said the same.

The study found that of those tenants who wanted a break clause in their tenancy agreement, the majority said six months was their preferred period of time.

Of those surveyed, 38% have lived in five or more privately rented properties and the main reason for moving between rented homes was to upgrade to a 'better' or larger property.

What have we learnt?

These studies suggest that extremely short and flexible agreements are not necessarily that popular or common, while there was no mention of lengthy three-year tie-ups.

As with most things in life, it seems that when it comes to tenancy durations, tenants prefer something more or less in the middle.

The most popular contract length, according to these studies, is something between six months and two years. Of course that doesn't mean there aren't tenants out there who are after a short-term fix or a long-term stay.

However, when drawing up a tenancy agreement it's important to think about what is best for you and what your tenant requires, rather than just choosing the expected standard.

These comprehensive studies have also shown us that polarised generalisations made about what tenants want in the press should not always be taken at face value.

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