New rules on High Value Tenancies |
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14th April 2010
There have been changes to tenancies with a rental value over £25,000 and under £100,000 in that they will automatically become Assured Shorthold Tenancies on 1st October 2010
There are four main practical effects.
• A tenancy which is granted before 1st October will automatically become an AST. Irrespective of the wording of the tenancy agreement, the 1988 Housing Act will override any terms contained in the contract. So even if both parties have agreed under a standard non Housing Act Tenancy, for example, to one months notice on either side, the Landlord will still be obliged to serve 2 months notice under Section 21 of the Act. Any current claims for possession for any other reason, such as arrears, will fail unless the case is heard before 1st October. On this date proceedings may need to re-issued under Section 8 of the Act.
• An tenancy due to finish between 1st October and 1st December will not expire until the landlord serves a Section 21. This cannot be served until 1st October as, until this date, a tenancy will not be covered by the Act. The solution if a Landlord wants possession and a tenant needs to vacate is to get both parties to agree to ‘mutual surrender’. Nevertheless, if the tenant doesn’t want to leave, it will be impossible to force them do so before 3rd December unless the Courts issue a ruling to allow a mechanism to do so.
• Upon the renewal of all tenancies after 1st October, a new AST will need to be provided.
• Within 14 days of 1st October, any deposits will have to be registered in an appropriate scheme. It is argued by some that this may leave the landlord and agent open to a claim for the usual penalties. There is of course the reasonable argument that the deposit was taken at a time that the tenancy was not an AST and therefore that there is no need to protect in much the same way as there was no need to protect deposits taken prior to 6 April 2007 when the tenancy deposit legislation first came into force. My view is don’t worry about it just yet – it will become clearer in time.
For Landlords concerned as to how you can register your tenants deposit, please visit www.depositprotection.com
This article if for guidance only and Landlords should seek independent advice from their Solicitor.
