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Written by rosalind renshaw

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

The Assured Tenancies (Amendment) (England) Order 2010 will come into force on October 1. As its title suggests, it will apply in England only, and not elsewhere in the UK. The transition could produce several problems for agents and landlords.

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.

However, if a Section 21 notice were to be served before October 1, it might not be valid.

Smith said that these problems would need to be worked out by the courts.

Comments

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    There is very little crystal clear 100% correct information or detail being given at the moment on this subject by anyone - except David who is right the £100K ANNUALISED don't forget rent figure comes ion from October. Yopu don't create them between now and then, but as at October 1st whatever CLG dreams up will come into force. No-one lnows for certyain what will happen yet because CLG themselves have not decided. There is still, hopefully and if sanity prevails, an outside chance that CLG will do the sensible thing and make it all NEW £100K + ASTs have the deposit protected immediately and existing ones on renewal or re-let. Doubtless such a sensible and above all common sense approach (as with ASTs when TDP first came in) is beyond the wit of CLG but that is by far the most sensible way forward.

    • 02 April 2010 14:36 PM
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    Sorry Steve, but you cannot set up an AST on as 35K tenancy in July this year. This is a fundamental misunderstanding of the Housing Act.

    You may be able to protect the deposit if you want to but this is different.

    I have spoken to CLG and they said the delay till October is to allow for issues like deposits and court cases to be identified and the correct processes agreed.

    • 01 April 2010 13:12 PM
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    I'm the PR guy at the National Landlords Association. Perhaps some helpful answers here.

    R: it doesn't make a lot of difference what you do. But if we were you we would issue an AST from the outset and get it protected. That way it's done and dusted before the (potential) rush on 1 October.

    Guy Haller: the Regs are out and are brief. But you WILL have to protect all existing AST tenancies up to £100k by 1 October. Apparently, Courts are being informed about the situation. The Government told us: "it is not our intention that landlords should lose out."

    Does this help?

    • 01 April 2010 12:11 PM
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    "R" Don't forget D

    • 29 March 2010 17:44 PM
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    Clear as mud then.

    We will have a contract due to start Aug 10 with a value of £35k. Should we :

    (a) issue a non-AST contract until 30 Sept and an AST from 1 Oct ?
    (b) issue an AST from Aug ?
    (c) do something else ?

    • 29 March 2010 10:53 AM
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    Whilst the reasoning behind this is lauderble, all I can think of right now is to quote Laurel and Hardy;- "That's another fine mess you've gotten us into"!

    I sincerely trust that when we see the full regs, that existing tenancies will be treated as ASTs and deposits have be transferred within TDP rule upon Renewal NOT on 1st October; nightmare otherwise.

    • 29 March 2010 10:37 AM
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