Please note: Leeds Building Society only accepts mortgage applications from intermediaries where they are providing an advised sales service, with the exception of Buy to Let & Holiday Let applications. It is the responsibility of the intermediary to ensure that all applicable law including, without limitation, the Financial Conduct Authority rules on advised mortgage sales are complied with including, without limitation, the provision of adequate explanations.

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Longer term tenancies – what the changes mean for landlords and their tenants

Research has found that the average house hunter estimates they will be able to purchase their first property at 37, with a further 35% not intending to buy their own home at all[1]. While the Government has put a number of initiatives in place to increase home ownership in the UK, there are many people for whom renting will be the preferable option – whether that is while they save for a deposit or for the foreseeable future.

Whilst not a legal requirement lenders often want landlords to use the Governments model tenancy agreement when letting their property, however until recently the model tenancy agreement only provided for a term of 6 to 12 months which made it challenging for a lender to lend where a longer term had been agreed between the tenants and landlord. Landlords using the model tenancy agreement were left with little flexibility to offer longer tenancy terms for long term renters – meaning that they and their tenants had less stability. With homeownership falling[2], renting in the long term is becoming an ever more viable option in the UK and this is reflected in the desires of renters for stability and security – research by Shelter found that 7 in 10 renters would value longer term tenancies[3].

The Government has now updated the model tenancy agreement which encourages lenders to allow long term tenancies from the outset – and for those landlords wishing to use the model tenancy it still offers protections in the contract for tenant, landlord, and lender. To reflect this change, we have removed the maximum tenancy period in our Buy to Let lending policy. We will now accept tenancy agreements for a period to suit both the tenant and the landlord based on the model tenancy agreement. It is our hope that this will help both longer-term tenants and our buy-to-let landlord clients by allowing the opportunity for more flexible terms for everybody.

 

[1] ‘One in five first time buyers priced off property ladder following interest rate cut’ – MoneySuperMarket press release, 16th August 2016

[2] http://www.resolutionfoundation.org/media/press-releases/home-ownership-struggle-hits-coronation-street/

[3] http://blog.shelter.org.uk/2015/11/facts-are-facts-7-in-10-renters-want-longer-tenancies/

For more information about Leeds Building Society’s Buy to Let offering, or to speak to one of our team about general enquiries or specific cases call 03450 50 5555. We may monitor and/or record your telephone conversations with the Society to ensure consistent service levels (including colleague training).