Shelter calls for new tenancy model

A new five-year private rental contract should be introduced to give people living in the squeezed sector greater stability, a charity said.

Shelter said a new type of tenancy called the Stable Rental Contract should become the norm across the rental market in England to help tenants put down roots and give landlords greater certainty over returns.

It suggested that under the five-year contract rents should increase in line with inflation each year, giving tenants and landlords predictable outgoings and incomes.

Shelter said the contract should also include flexible terms so that tenants can leave after two months' notice and landlords should be able to end the tenancy if they want to sell the property or evict bad tenants.

The call came as a separate study found that private rents soared for the fifth month in a row in August to reach a new high, amid renewed pressure caused by a wave of graduates entering the market, which is already facing strong competition, with would-be buyers struggling to get on the property ladder.

Typical monthly rents increased by 2.9% year-on-year to reach £734 in August in England and Wales, according to lettings network LSL Property Services, which owns chains including Your Move and Reeds Rains.

Shelter said a generation who have been "locked out of home ownership" should be offered a better deal, the charity finding that over the last 15 years the number of people renting their home from a landlord almost doubled to 8.5 million in England, nearly a third of renters being families with children.

The charity found that 35% of renting families worry about their landlord ending their contract before they are ready to move out and one tenant described the experience as like "walking on eggshells".

Shelter said two-thirds of those surveyed said they would like the option of remaining in their home for the longer term but the current typical time spent in a rented home is just 20 months, and such a contract could be introduced immediately within the existing legal framework in England.

It said longer-term contracts could also be more profitable for landlords, as short-term ones can bring costly vacant periods and re-letting expenses, which can undermine returns.