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Revision of the threshold for Assured Shorthold Agreements

Thursday, April 1, 2010 Posted in: Landlords

The Assured Tenancies (Amendment) (England) Order 2010 will come into force on October 1st 2010.   The transition could produce several problems for agents and landlords. Until this change, any tenancy agreement between parties where the rent due exceeds £25,000 per annum cannot be subject to the construct of an assured shorthold tenancy agreement.  This has meant that the tenants of many large student properties and family homes have not had their deposits protected.

The Government has now published the Statutory Instrument which will raise the rent threshold for Assured Shorthold Tenancies from £25,000 to £100,000 a year.  

Tenant law specialist David Smith, of PainSmith solicitors, said: “While this is not, as has mistakenly been stated, a retroactive change, it will affect tenancies that are already in place on October 1. Therefore a tenancy that has started before October 1 which is for a rent in excess of £25,000 per annum but for less than £100,000 per annum will, on October 1, automatically convert to an AST.”

“This will mean that a number of tenancies will, on that date, need to have their tenancy deposits protected and will also fall under the section 8 notice regime for breach of contract and the section 21 notice regime for the termination of the tenancy.” 

He said the change poses potential problems for deposits taken for tenancies starting before October 1. Under tenancy deposit law, deposits must be registered with a tenancy protection scheme within 14 days of receipt. Since almost all of the deposits in question will have been taken long before this, it could leave the landlord and agent open to a claim for the usual penalty, which is three times the value of the deposit. 

He also said that where court proceedings have been started for breaches of contractual tenancies, by the time these cases come to fruition, the agreements would have become ASTs. This could mean that the wrong notices had been served. 

There are also issues for tenancies that have less that the notice period left to run on October 1st.  If the tenants of a non- housing act agreement decided to stay put at determination, and the correct notices had not been served, a court may find in favour of the tenants.

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