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Benefits of a longer commitment

  • Published at 04:34 pm March 17th, 2020
bproperty-issue 22
Courtesy

While landlords agree to not increase rent anytime during the tenancy tenure, they need to consider the market conditions of not just present, but also future times

There are plenty of things that people in Bangladesh do not agree with, such as who is the better batsman and which road has the most traffic. However, there is one thing that everyone is in unison about — the country’s residential rental landscape is far, far away from being ideal. Even with the strides made in recent times — thanks to the introduction of technology and professional real estate service providers — there is much to be desired from this vital aspect.

Both sides of the rental isle, tenant and landlord, have and continue to endure numerous problems that seem to be a package deal when it comes to this type of housing. Unexpected rent increases, eviction without prior notice by either party, low vacancy — these things create uncertainty, insecurity and unnecessary stress for both tenants and landlords. But how much longer should these problems persist? Truth be told, wiping away such issues from our society may be impossible, but lessening it is not. Maybe it is time we take a look at the concept of “long-term lease” for homes.

We have all heard the term “lease” being used, mostly in the context of a commercial entity. This is where an organization rents land, space or some sort of property from the government or another entity for a significant length of time. So, if a lengthy tenancy agreement can be formed by two business entities for commercial purposes, why can it not for residential purposes between two individuals?

While change is a good thing and can be the catalyst for progress and development, frequent and unnecessary changes can be an agent of chaos and that is what it brings to the rental landscape for both tenants and landlords. The instability brought by unexpected and unnecessary change can, to a great extent, be eliminated via long-term leases of five years or more — bringing much-needed stability for all.

This stability can be achieved thanks to the makeup of this commitment, which counters much of the worry the country’s rental landscape faces today. It has the capability to open new doors for both tenants and landlords that are almost inconceivable today. A tenant who is a parent can stop worrying about where to live to ensure quality education for their children. They can actually sit down and plan the next five or 10 years of their life and the life of their children with the rental home as their base for the foreseeable future.

This stability has a profound impact on landlords because, after all, trying to find a tenant can be difficult for landlords who are still stuck in their “conventional” ways — sometimes months even. This sort of “low vacancy” can have a significant detrimental effect on the finances of the landlord. This stability can also be greatly advantageous to landlords as well since this long-term commitment eliminates the need to frequently look for tenants for their property.

Furthermore, a landlord will be more aware of when a change of tenant will be necessary — years in advance — so they can plan accordingly without the possibility of having to resort to a frantic search for a new tenant all of a sudden. A landlord can also bank on an uninterrupted steady flow of income until the lease term ends, which will continue again once a new tenant is found. But to reap the benefits of a long-term lease, landlords and tenants need to make a few compromises that would provide incentives to both and motivate them to form a longer commitment.

As seen in other countries with long-term residential leases, rent control is perhaps the biggest motivator for tenants. In places like Australia, the landlord sets a fixed rent amount for the tenure of the contract and no time during the lease is the rent increased. The same can be done by Bangladeshi landlords who want people to rent their homes. A major gripe of Bangladeshi tenants is the unregulated annual rent increase. So, without it, more tenants would be inclined to come to commitments.

However, rent control is a give-and-take thing. While the landlords agree to not increase rent anytime during the tenancy tenure, they need to consider the market conditions of not just present, but also future times. As such, the set rent amount may possibly be a bit higher than the present going rate, and the tenant needs to understand the context of that. Because, even if the rent seems higher than usual, down the line, it will be more cost-effective.

Landlords also need to allow a tenant more flexibility of home modification. While the tenant will not have the permission to change the entire blueprint of the home, of course, they will have the luxury of changing things that are necessary and make their long stay feel more homely. 

And the benefits do not end just there. By committing to rent and renting out a home for at least five or so years, the tenant would not have to worry about any out of the blue eviction notices which, in turn, would allow goodwill and faith between the tenant and the landlord to foster and may even help create a bond that plenty of tenants or landlords say do not exist.

As it stands, the existence of a long-term residential lease is still just a concept. However, maybe the time to introduce this concept into practice is now at hand. If the landlords and the tenants of the nation can be shown how much value and benefits it holds for them, they may be more inclined to try this out than many would think. We have tried a lot of things without much result to make the all-too-many problems of the rental landscape go away. So, why not try this? See if there is actually some merit to this concept. 

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