National lettings chain Belvoir reveal the rise of the long-term tenant
Transient tenancies are being replaced by long-term living solutions in many areas say the experts at Belvoir...
“Our longest tenancy is a couple who moved into the property in February 2004, so they’ve been with us for more than 10 years. We’ve got tenants who have been in properties for longer than that too which we’ve inherited from other agents along the way.”
Proprietor of Belvoir Bury St Edmunds Patsy Day agrees. “We’ve definitely noticed a trend towards longer-term tenancies at our office,” she says. “This was especially noticeable in January and February when we didn’t get the volume of notices from tenants looking to move on at the beginning of the year as we usually do.”
Although most tenants have an Assured Short hold Tenancy Agreement (ATS), despite its name these can run for long periods, giving tenants the option to stay in a property for many years.
In the North, Belvoir Cheadle has experienced similar record tenancies, perhaps indicating a national trend towards long-term renting.
“The tenancy lengths at our office are quite long,” says owner Darragh Lee. “On average our tenants stay from 18 months to two years, but we’ve got some tenants who have been in their current properties for about five years, plus a few that haven’t moved for eight or nine years.”
Likewise, owner of Belvoir Aberdeen Lewis Stuart has reported similar experiences...
“Most of our tenancies tend to run for two years or more and our longest tenancy dates from 2006,” he says. “Aberdeen has two universities and many of our tenants are students but we’ve noticed an increase in tenancy lengths in this sector too. Students are no longer moving on an annual basis as they once did and are tending to stay at the same property for longer.”
“I think tenancy lengths are increasing for a combination of reasons,” explains Jeremy. “Rental prices have gone up so people are more cautious about moving – from an affordability point of view a lot of tenants can’t afford to do it. And some tenants will be saving for deposits, which of course takes longer now.
“I think in our area there is also a general lack of property available. If you were a tenant in this area you wouldn’t give your notice if you didn’t like where you were because there would be a huge fear that you wouldn’t be able to find an alternative. What we’re finding is that people will have a little look and if there’s nothing out there then they’ll stay for another year rather than putting themselves under pressure.”
Patsy adds, “I think tenancy terms are increasing partly due to uncertainty, partly due to rising rents and partly due to the ongoing changes in the property market. There is a lot going on and I think there are some tenants out there who are sitting back and just waiting to see what will happen next.”
Darragh Lee also believes the economic climate has had an impact on people’s moving preferences, with long-term renting providing a practical solution for an increasing amount of tenants.
“There are many reasons why people are starting to think about renting as a long-term living solution,” he says.
“Firstly, I believe that the recession has brought with it a shift in attitude towards owning property and how important that is. Some people have effectively lost money on their properties during the recession which has started a mental shift towards believing that home owning isn’t the ‘be all and end all’ that it once was.
“Owning your home is good if you’re on a repayment mortgage and therefore paying the mortgage off, plus there’s room for capital growth. But, if you’re not meeting that criteria and you’ve got a fairly large mortgage, then the interest you’re paying is effectively ‘dead money’. A long-term rental is the perfect solution, giving stability without the disadvantages of the property being your responsibility.
“Also, we’ve got quite a lot of older people becoming long-term tenants. They’ve chosen to downsize and are keeping hold of the equity from their previous property but want the stability of a long-term home.”
“From a tenant’s point of view, long-term tenancies can give long-term security and security is key for many tenants, especially those with children who go to the local schools,” says Jeremy.
“Long-term tenancies can have big benefits for a landlord too as there will be no void periods and rent will be paid every month. Also, a smaller turnover of tenants causes less wear and tear to the decor of the property because furniture isn’t being moved in and out on a regular basis.”
Patsy agrees. “A long-term tenant can benefit a landlord hugely,” she says. “If someone lives in a place for a long while, they make it their home and they treat it like a home. Often they will do any small fixes needed themselves during the tenancy and literally treat the place as though it’s theirs, taking care to look after the property.
“Another benefit is the reduced cost of repairs and maintenance. As a landlord you’re not having to go through the property and paint and replace carpets and do all the things you’d normally do at the end of a tenancy – because the tenant’s in situ they’re often happy to live with what they’ve got.
“Furthermore, as the length of the tenancy increases the strength of the relationship between the tenant and the agent or landlord often gets stronger too, which is a huge benefit.”
Supply and demand
An increase in tenancy lengths is affecting housing stock levels, with many rental properties now attracting several potential tenants.
“Tenants not serving notice in the same numbers as they were previously has a negative impact on stock levels as that ‘churn’ isn’t there,” says Patsy. “When tenants new to the market start looking for somewhere to live they’re often finding it harder to find the right place, with many tenants queuing for properties.”
“We need more stock,” agrees Darragh. “If people aren’t moving then there’s not enough availability to satisfy the increasing demand. We’re always trying to find new landlords – we don’t have enough properties and neither do the other agents in this area. This shortage of supply means properties new to the market are snapped up quickly and many more are needed.”