editor posted on April 16, 2010 05:04
Assured Shorthold Tenancy (AST) limit to increase to £100,000
Currently, AST tenancies are those with rents totalling up to £25,000 a year. Any tenancies with a higher value are contractual tenancies, where there is no requirement to protect the tenancy deposit.
However, from 1st October 2010, tenancies worth between £25,000 and £100,000 a year will become ASTs overnight and all these extra tenants’ deposits will have to have been protected.
The change will have its greatest impact in central London and on family rental properties across the south-east, but will also impact on student-shared houses in multiple occupation (HMO) properties just about anywhere.
The requirement will cover all new tenancy agreements in the new price bracket, apart from very short-term ones, made from, and including, 1st April 2010 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 1st October, they could be in breach of the law.
Lettings law specialist David Smith, of Pain Smith solicitors, said: “It looks as though this will apply to tenancies that are already in existence. 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 some 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.”
Rob Wellstead of Lenwell added: “The deposit protection schemes and TDS particularly, will see an increase in deposits being protected and therefore, almost certainly, in disputes, which will be of higher value and more contentious. This could have a significant subsequent effect on the costs of deposit protection.”
Should you have any questions concerning this change, please do not hesitate to contact us and we will happily advise based on your particular circumstances.