Changes to Assured Shorthold Tenancy Thresholds |
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15th March 2010
Thousands of higher-rent tenancies will pile into the tenancy deposit protection schemes over the next six months, set to put yet more pressure on them.
Currently, AST tenancies are those with rents up to £25,000 a year. Anything above that is a contractual tenancy, where there is no requirement to protect the tenancy deposit.
But from October 1, tenancies worth between £25,000 and £100,000 a year will become ASTs overnight, which means that by then, all these extra tenants’ deposits will have to have been protected.
The change will have a huge impact in central London and on family rental properties across the south-east, but also on student-shared HMO properties just about anywhere.
The requirement will catch all new tenancy agreements in the new price bracket, apart from very short-term ones, made from, and including, April onwards.
David Salusbury, chairman of the National Landlords Association, said: “The retrospective nature of this change is highly regrettable, and it could have a wide-ranging impact on the letting of private residential property. Landlords in this higher rent bracket will have to protect deposits for the first time. If they fail to do so by October 1, they could be in breach of the law. We are told the courts are being forewarned.
“The NLA believes the Government is rushing through this change without fully thinking through the consequences. We call for greater consultation to ensure this measure does not have a negative impact on the private rented sector. We will continue to provide the most up-to-the minute help and advice on the issue to landlords and have published a guide to help landlords comply with the law. The NLA will continue the press the Government for further consultation.”
Lettings law specialist David Smith, of PainSmith solicitors, said: “It looks as though this will apply to tenancies already out there. As it happens, due to the way the Housing Act 1988 was constructed, the Government had very little choice as to how it did this. It could have done it in other ways but it would have taken longer and therefore could not have been rushed through to suit an election timetable. It will create a lot of problems in relation to tenancy deposit protection as the law technically requires that a deposit be protected within 14 days of receipt.
“However, that cannot happen for a tenancy that has shifted from a non-Housing Act tenancy to an AST by a quirk of the law.”
He added: “London will be heavily affected as will certain student properties in other cities. The deposit protection schemes and, unfortunately, TDS particularly, will also see an increase in deposits being protected and in disputes which will be of higher value and more contentious, which will also have a significant effect.”
