Santander is one of many lenders that are extending their tenancy agreements. Both tenants and landlords can breathe a sigh of relief as buy-to-let investors can now offer 36-month tenancy agreements. Previously, landlords were only able to offer up to 12-month leases so were extremely limited. The change should enable more stability for both landlords and tenants.
The director of mortgages at Santander Miguel Sard, has stated that rising property prices in London and the South East are preventing renters from entering the property market. Although there is an aspiration to do so, Sard outlines that tenants are “resigned to ploughing their money into rent and are unable to save for a deposit”. Whilst waiting for the funds to purchase a home, they are still able to occupy a property. For renters it will mean that they’ll have more flexibility with their extended lease.
The Mortgage Works, Precise Mortgages, Aldermore and HSBC are amongst the lenders to offer longer assured shorthold tenancy (AST) agreements. This is the most common tenancy in England, with the mentioned lenders offering up to three years. Meanwhile, Barclays will consider up to two years and Leeds Building Society don’t have an overall limit for ASTs.
It is essential for lenders to offer flexibility because it will ultimately benefit their business. Giving landlords incentives is hard in the buy-to-let market so giving them options is imperative. A longer tenancy also means more security for renters, which is especially important in an uncertain housing market.
The increased stability will also benefit landlords. Currently, buy-to-let investors are facing difficulties such as stricter lending criteria, changes to tax relief and stamp duty rules. Furthermore, rent will have risen 14% by the end of 2022 yet the number of available homes to rent decreases.
Santander is one of many lenders altering their policies during a time of uncertainty and mounting political pressure on lenders to make tenancy agreements more secure. Lenders who haven’t extended their buy-to-let agreements will most likely follow.
