Eric Pickles, the communities secretary, has outlined plans for a new “tenants’ charter” which would give people the opportunity to demand longer contracts from their landlords.
Mr Pickles says the longer term contracts, between two and five years, would help the millions of people trapped in the cycle of short-term contracts.
Typical “assured shorthold tenancies” last between six months and a year. At the end of the period, tenants have to pay lettings agencies for new contracts or search for new homes.
However the move by Mr Pickles threatens to put large numbers of landlords in breach of buy-to-let mortgage terms, which generally stipulate that tenancy agreements cannot be longer than a year.
Banks and building societies like short-term agreements as they make it easier to repossess a property if the landlord fails to meet repayments on a buy-to-let loan.
Coventry building society, which through its Godiva brand is a major buy-to-let lender, said: “If a buy-to-let borrower offers a tenant an agreement lasting more than 12 months they would be in breach of our terms and conditions.
“We have a range of sanctions, such as refusing to offer further borrowing to a landlord who has breached their terms in this way. But we aware of the measures being proposed and it is something we are keeping a watching brief on.”
Some mortgage brokers have said that lenders may be forced to rewrite mortgage contracts retrospectively to meet the government’s demand for longer-term tenancies. However some lenders may welcome longer-term tenancies, as they reduced “voids” – periods when a property is empty and unlet.
Housing charity Shelter has welcomed the new charter, saying it is much needed and would provide greater long-term stability for families with children.
Speaking to the Conservative party conference Mr Pickles said: “Families deserve stability for their children, and all tenants deserve a good and transparent service from their landlords and lettings agents.
“Today’s proposals will raise the quality and choice of rental accommodation, root out the cowboys and rogue operators in the sector, and give tenants the confidence to request longer fixed-term, family-friendly tenancies that meet their needs.”