Changes to Tenancies with rent over £25,000 pa

As from 1st October 2010, the threshold for Assured Shorthold Tenancies (ASTs) will change resulting in many tenancies which were outside the 1988 Housing Act together with 2004 Housing Act falling under the legislation.

Previously, tenancies with an annual rent over £25,000 were exempt. However from 1st October, all tenancies under £100,000 will automatically become AST’s (subject to certain exemptions such as properties let to Companies, Holiday Lets, where Landlords live on the premises) and somewhat unusually this legislation will be applied retrospectively.

There is some confusion over the implications of this change, however we are confident that our advice will not only simplify the process, but will ensure you are complaint.

• You do not need to change the tenancy agreement as the transition to an AST is automatic and the tenancy subject to statute, however you should familiarise yourself with the requirements of the 1988 Housing Act particularly in respect of notices. We recommend however that a replacement tenancy agreement is provided upon the next period of renewal or any replacement tenancy.

• You will be required to protect your tenants deposit in an approved scheme. You can do this now in order to avoid problems at a later date. For the avoidance of doubt, if a deposit is not registered in accordance with 2004 Housing Act you may be liable for a penalty of three times the amount of the deposit and cannot seek possession of the property until such time as the deposit is registered. The Law states that a deposit must be registered within 14 days of the commencement of a tenancy however because these changes apply retrospectively, this is clearly impossible. As such, we recommend that the deposit be registered by 1st October and certainly within 14 days of this date.

• Any notice served on a tenant prior to 1st October to end a tenancy after that date should not be relied upon. Should you intend to serve notice to determine a tenancy after 1st October you should do so under the relevant section of 1988 Housing Act after 1st October to avoid any uncertainty.

• In the event your tenant is in arrears or in breach of contract and where you are commencing or intending to commence possession proceedings you should be certain that an order will be granted before 1st October. Failure to do so may require you to re-issue proceedings under Section 8 of the 1988 Housing Act. We strongly recommend that you seek advice from your solicitor accordingly.

• You should be aware that from 1st October, your tenant has the right to a minimum term of 6 months before possession can be sought effective from the original commencement date of the tenancy. Clearly this will only apply to tenancies granted after 1st June as you are required from 1st October under section 21 of 1988 Housing Act to serve not less than two months notice to end a tenancy.

This information is provided in good faith and is not intended to replace advice from a solicitor. This legislation is new and the effects and application uncertain. Nevertheless, we have provided advice which we believe both informs and protects your interests. We strongly recommend that you should seek formal legal advice from your solicitor as the opinions over these changes are continually changing.

Please do not hesitate to contact us for details of how to provide a new tenancy agreement or in respect of deposit registration.

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