Consultation on minimum three-year residential tenancy with six-month break clause

Assured shorthold tenancies (ASTs) grant tenants a minimum of six months security of tenure. Any order for possession following service of a notice under section 21 of the Housing Act 1988 (HA 1988) will not take effect earlier than six months after the beginning of the original tenancy (section 21(5), HA 1988).

The government believes that longer tenancies would be more beneficial to both tenants and landlords. On short term contracts, tenants face instability, a lack of power and the potential cost of unplanned and unwanted moves. On the other hand, longer tenancies would save time and money spent on unnecessary renewals.

Therefore, the Ministry of Housing, Communities and Local Government (MHCLG) is consulting on its proposed model for a minimum three-year residential tenancy with a six-month break clause, and the options for implementing this.

The main facets of the model would be:

  • A three-year term with an opportunity for either landlord or tenant to leave the agreement after the initial six months.
  • Following the six-month break clause, the tenant would be able to end the tenancy by providing a minimum of two months’ notice in writing.
  • Landlords would be able to recover their property during the fixed term if they had reasonable grounds, akin to the grounds under Schedule 2 to the HA 1988.

Certain tenancies will fall outside the parameters of the new regime: for example, holiday lets which realistically do not last for three years. Further, rents would only be able to increase once per year, and any agreement on rent should be detailed in the tenancy agreement.

The government is considering particular aspects of implementing the new regime, including the need for legislation, tax relief for landlords, and awareness raising initiatives.

The consultation closes on 26 August 2018. The proposals apply to England only.

Source: MHCLG: Overcoming the barriers to longer tenancies in the private rented sector (2 July 2018) and Practical Law.