Changes to Assured Shorthold Tenancies

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Changes to Assured Shorthold Tenancies

September 2010

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From 1 October 2010, the annual rent limit for ASTs will increase from £25,000 to £100,000. This will be reviewed every five years and extends to England only.

Above this limit the tenancy will not be governed by the HA 1988, but will be a common law tenancy. The changes will affect both assured and assured shorthold tenancies, and existing and new tenancies whose rent falls within the new limit: existing tenancies which are not ASTs due to their rental level will become one from this date.

Landlords in the higher rent bracket will have to protect tenant’s deposits for the first time and issue prescribed information. Failure to do this could mean they are in breach of the law.  Tenancies which are affected by this change must be registered two weeks following the change.  Houses in London where rent is high, and houses which have multiple occupants are likely to be the most affected as the rent is more likely to exceed the current threshold.

The HA 1988 gives tenants greater protection than a common law tenancy, therefore landlord’s will have greater difficulty in gaining possession once a tenancy has been converted. Normal termination procedures will apply using S.21 notices (two months notice) as opposed to a notice to quit (one month’s notice).

If, after the change, the landlord requires possession on grounds of breach of tenancy/rent arrears, then a S.8 notice will need to be served.  Agents should be sure to notify their landlords of the impact of this change.

Care should be taken over tenancies which were granted after 15 January 1989, and prior to 28 February 1997 which were neither assured, nor assured shorthold tenancies, due to the rental level. After 1 October, these will turn into assured tenancies, whereby the tenant would have security of tenure for life, at a market rent.

There may also be problems with tenancies which exceed the current threshold which are due to expire less than two months after 1 October 2010 as it is unclear whether a S.21 notice will be valid as the tenancy will not have been an AST at the time of service.

The RICS has suggested that a deed of variation is attached to the lease in order to cover any clauses which need to be added or amended to create an AST.

For further information contact Stephen Rutledge on 01295 226292 email stephen.rutledge@fishergerman.co.uk

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