Government policy at odds

Government policy over leasehold reform is fully at odds with its stated policy towards the Private Rented Sector, ARLA, the Association of Residential Letting Agents, claims. The Leasehold Reform Bill, expected to be announced in the Queen's Speech next month, is set to limit tenancies in leasehold property to just five years.

However, only last month at the ARLA Annual Conference, a spokesman for Housing Minister Nick Raynsford actively encouraged the development of Longstay tenancies. These tenancies are designed to run for more than five years, give a sense of security and belonging to tenants and rid the sector of the perception that renting is only for the short to medium term.

The draft Commonhold and Leasehold Reform Bill proposes to limit tenancies on commonhold units to five years with no renewals. Explanatory notes to the draft suggest that the aim is to prevent purpose-built blocks and conversions of commonhold flats from becoming blocks of privately rented flats.

The property industry belief is that government has failed to take account of the new direction of the residential development market, where between 20% and 40% of new build flats are bought by investors who plan to rent them out.

"Purpose-built development for the letting market is a result that both successive governments and the industry have been aiming to achieve for years now," commented Frances Burkinshaw, Chairman of ARLA. "The Private Rented Sector is smaller in this country than any of the other advanced economies. We have all been working to increase the sector from its present 11% to between 15% and 20% in the foreseeable future. This is the only way to provide choice in housing as major social and demographic changes take place in society."

ARLA also believes that setting time constraints on the letting of commonhold flats would be impracticable. The Association points out that it would be very difficult to police the tenures of flats and the main result would be to create a black market in the letting of commonhold property. No form of regulation would then be possible.

As well as introducing the successful Buy to Let scheme, ARLA has been advocating Longstay tenancies for the Private Rented Sector for several years. Designed for tenants who wish to settle in one place, Longstay incorporates a major change of emphasis for Assured Shorthold tenancies, where it can be tailored to fit long term circumstances. Under the terms of a Longstay Tenancy, drawn up within the framework of the existing Assured Shorthold, as introduced in the Housing Act '88, the tenant and not the landlord is responsible for all internal repair and decoration. The tenancy runs for a minimum of three years and at a discount to normal market rates.

"The Longstay is the solution for investor landlords and a significant proportion of the population who do not wish to be owner occupiers for one reason or another," commented Frances Burkinshaw. "All governments have been calling on the Private Rented Sector to meet the demands that local authorities and housing associations can no longer fulfill. Standing in the way of investment landlords with this new Bill could set back freedom of choice in housing by a decade."

ARLA is encouraging its member firms to develop portfolios of property to rent that are available for the short to medium and the long term.

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