It would seem to me that it would be a win win if agents got paid more for managing a property over time as opposed to rewarding them for churning over tenants. I don't think it is in the tenants nor the landlords interest that short term leases are signed, at least as far as long term PI's go.
Presumably the PM gets paid to get me good tenants. A good tenant is one who pays their rent on time, keeps the place tidy and does not make unnecessary requests of the landlord. A good tenant can stay as long as they like.
If a tenant is not a good tenant then I do not want to encourage them to stay. Personally I believe I should be entitled to money back from the PM who gave them the keys in the first place.
The reality is that PM fees are based on the fact that the PM will get some good, bad but mostly in between tenants, and the average churn on tenancies. So there is no need to pay them extra when they get it right.
As a landlord I'm not too keen on signing a long-term lease without dealing with a tenant first hand on a shorter lease. I would suggest the tenant would need to rent from me for a twelve month period prior to being allowed a longer term lease. This would give both the tenant and myself a fairly good indication of whether a longer term lease is desired.
In addition periodic rent increases would need to be included within the terms of the lease. Given that a tenant is wanting a longer term lease they are also likely to want to keep any increases minimal. On the other hand the landlord is unlikely to want to lose money when they are providing security of tenure. So these terms will need to be negotiated to ensure that the returns are maintained as much as possible, whilst giving the tenant a level of comfort that they will not be disadvantaged and that they have the security of knowing the frequency and amount of any rent increases.
There is a clear disadvantage for a landlord with a long term lease as it limits their ability to terminate the lease in a timely manner if their circumstances change. This is something that generally does not affect the tenant as a change in their circumstances will be taken into consideration by a tribunal more readily than that of the landlords.
There is also the difficulty of a landlord selling the property with a long term tenancy in place, particularly if they wish to take advantage of short term market conditions.
So while there are benefits to the landlord in having good long term tenants, it does not necessarily follow that these same benefits would be realised with a long term lease in place.
Regards
Andrew