How flexible tenancies will benefit landlords and tenants in post-Brexit London.
Since the EU referendum, there has been much talk in the media regarding London’s position in the world.
Opinions seem to vary about how the UK's decision to leave the EU will affect the city, while others are talking about how London may need to reinvent itself.
We are not sure what form this reinvention should take, but London has had to adapt several times in its history. From being abandoned for some time after the Romans left, to a devastating plague, a fire in the 17th century, and the ravages of bombs in the Second World War, our capital is familiar with the necessity of reinvention.
However, this latest demand for reinvention comes not from pestilence, war or destruction, but from the demands which may be imposed on the city by the UK leaving the EU.
There is talk of London having to embrace flexibility in every area of commerce. One of these areas concerns people who will be looking to rent in London, and landlords wishing to let property in London.
How will Brexit affect rent prices in London?
To use a cliché, the jury is still out on this one. Many experts predict an exodus of non-British EU residents from London, resulting in a glut of vacant properties that will drive the cost of rents down. On the surface, this appears good news for those looking to rent in the city. However, there is another side to this that will not resonate well with would-be tenants.
Rents may fall to a level which many landlords consider too low, forcing them to leave the buy-to-let market. This would lead to a shortage of rental properties, which in turn would mean rent rises.
An answer to the problem could be a situation that satisfies both tenants and landlords alike: flexible tenancies.
What is a flexible tenancy?
Flexible tenancies are used by local councils when they believe a long-term secure tenancy would be inappropriate. Many authorities will insist on a flexible tenancy with a minimum of five years, although some will allow a two-year minimum.
A flexible tenancy gives many of the rights of a secure tenancy to tenants, but the fixed term gives landlords the option of ending the tenancy at the end of the fixed term.
Who would benefit from a flexible tenancy?
Flexible tenancies will benefit both tenant and landlord. No one knows what, or if, there will be strict border controls, but we believe post-Brexit London will still attract young professionals looking to work here, either as employees or entrepreneurs looking to start up their own businesses. These people may want to rent, but will still seek some form of security in the tenancy.
Landlords will be looking for reliable tenants who are willing to commit for a fixed term of between two to five years. This will give tenants the security they want, while landlords will have the security of guaranteed occupancy for a reasonable period of time.
At Plaza, the majority of our tenancies are done on one-year assured shorthold tenancies (ASTs), with some of our landlords agreeing for tenants to have break clauses after six months to give tenants greater flexibility.
If you are looking for property to rent in Central London or properties for sale in Central London, or for more information on flexible tenancies and ASTs, please contact us today