Potential Three-Year Tenancies Proposed by Council

A council enquiry is currently proposing new landlord licensing schemes in one country in England, including a three-year tenancy. So what could this mean for property investors, property developers and landlords?

An inquiry into the private rental sector in Cornwall began in 2019, the resulting recommendations of which have just been published. This included possible licensing schemes covering Penzance, Newquay, Camborne, Pool, Redruth, Falmouth and Penryn. Part of these schemes is asking the government to make three-year tenancies the new standard in an attempt to “give tenants more security.”

However, this arguably also helps support the landlords and property investors looking for a more long-term reliable income. Three-year tenancies can see landlords feel more secure in their finances and help keep their properties inhabited for longer. Although they also run the risk of being stuck with unpleasant or undesirable tenants who show their true colours after signing the contract for a lot longer than they would have liked. It’s a double-edged sword that landlords need to consider if three-year tenancies were to become the new standard.

A spokesperson for the authority said, “Cornwall’s private rented sector continues to grow and currently covers 37,5000 properties – around 18 per cent of all housing in Cornwall.” This growing interest around the county and the vast number of rented accommodation could also suggest a new hot spot for property investors and landlords. With remote working and the desire to live in a home we love, not one we need because of location, people are finally making housing decisions based on their desires. This means couples and young families, often attracted to Cornwall for its picturesque location, are no longer restricted in their movements.

The spokesperson continued, “the inquiry panel clearly believed that the use of discretionary powers in the form of selective and additional licensing for several areas would give an opportunity to bring about significant improvements in privately rented homes, helping those living in poor quality accommodation at a scale not seen before in Cornwall.”

Cornwall councillor Cornelius Olivier, who chaired the inquiry, added, “we were also mindful of the effect that poor housing has in a wider sense, such as on people’s health and protecting children from harm as the numbers of children living in the private rental sector is known to have risen dramatically over recent years.”

Around 50% of Cornwall’s privately rented housing is concentrated in its 20 largest towns and is a more significant sector than social renting. This informs property investors and develops the target demographics they would be targeting. If a property investor wants to keep his portfolio largely focused around shared student or professionals accommodation, then Cornwall is not the area for them.

If the government responds favourably to the lobby for three-year tenancies, this could also signal change across the country. Property investors, landlords and property developers should keep an eye on the situation – and this area – to see what happens in the coming months. Expanding their portfolio to include Cornwall residencies could be a positive choice, as long as they consider how the demographic and location will affect the marketing and renting of the property.

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