Why we should back long-term tenancies

By Ian Merrick

Operations Director
Essential Living Management Ltd

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The nature of our lives has fundamentally changed in just a few generations. Gone are the days of a job for life, a young family by your mid-20s and a semi-detached to boot. Our existence is more frenetic than ever before: where our grandparents might have had two jobs during their lifetime our children will have 20.

This cultural shift can be viewed from opposing perspectives. You could argue that it is the flowering of personal choice, freeing us from the regimented world of the 1950s. Or you could view it as the rise of insecurity; jobs that only last a couple of years and tenancies that are even shorter. As with many of these supposed dichotomies, the truth is often somewhere in between.

The question of where we reside, where we sleep, where we eat and where we live our lives is of core importance to how we view ourselves. Millennials who rent are nearly half as likely to vote as those who live in their own homes. As the author, Ian Leslie pointed out in the New Statesman last year, this has as much to do with the lack of societal bonds that short-term renters experience as it does with the effort of registering.

Landlords need to change their attitudes to tenancy lengths, just as the government has changed its attitude to the rental market. Not only for the lofty ideals of democratic engagement and social cohesion but also for what Adam Smith branded ‘enlightened self-interest’. Longer tenancies are good for both consumers and for operators.

The British Property Federation has been instrumental in trying to reflect this change. They have accepted that the government wants a different offer for tenants. What’s more, our part of the sector has a strong commercial imperative for longer tenancies. Our backers are long-term, institutional investors who look for consistent, sustainable returns rather than the next quick buck.

The build to rent industry needs to lead the charge to end the culture of insecurity in housing and by offering residents the flexibility of 1-3 year tenancies with fixed rental increases assists greatly. Not least because the current situation damages the image of our industry, but also because empty properties cost money. A good relationship between operators and customers, which takes a longer perspective towards tenancies, is beneficial for both sides. Renters will benefit from a sense of community that can only develop through time.

For us ‘community building’ isn’t some woolly tick box phrase but a fundamental tenet in the way we treat our residents. Rather than renting out the penthouse apartment of our Vantage Point development (valued at about £7m) we have converted it into a communal space, a place where anyone can host a dinner party or unwind after work. This is in addition to the library, roof terrace, workspace and gym we also include. The idea is simple; we want our residents to develop a long-lasting relationship with the place they call home.

The BPF’s pledge to make three-year tenancies the norm in the build to rent sector is both a practical and a noble aim. We should look at tenancy insecurity as investment insecurity, recognising that both the residents’ and operators’ objectives are aligned. The government has asked the private rental sector to take a more active role in the housing market and we should oblige them by making build to rent a genuine alternative, not just the stop-gap it is so often perceived as. Only by changing our approach can we change these culturally ingrained perceptions towards renting.