The Statutory Instruments to increase the maximum rent threshold of an Assured Shorthold Tenancy (AST) from £25,000 to £100,000 have now been published by Parliament and much of it’s information provided to the National Landlord’s Association (NLA).
At this point in time, legislation associated with the Housing Act 1988 (as amended) states that tenancies formed with annual aggregate rent greater than £25,000 cannot be ASTs. These tenancies are formed on a contractual basis and are sometimes referred to as ‘non-Housing Act’ tenancies. Tenancy terms are negotiated and agreed by the landlord and tenant and are not enshrined by statute.
The Assured Tenancies (Amendment) (England) Order 2010 will come into force on the 1st of October 2010 and will be retrospective. As a result, any tenancy with an annual rent between £25,000 and £100,000 in existence on 1 October 2010 will become an AST overnight. Landlords and tenants will nolonger be able to negotiate individual terms for their tenancy. This means that all of the rights and responsibilities associated with the Housing Act 1988 will be extended to higher rent properties for the first time.
The original threshold was introduced in order to exclude ‘luxury lets’, however the limit was established in 1990 and has not been revisited to take account of inflation since. The Government consulted as a result of a Rugg Review recommendation and decided to increase the threshold to £100,000 as a result. This figure will subsequently be reviewed at five yearly intervals.
The most obvious and immediate affect of the increase is that all Tenancy Deposits will be protected under the Deposit Protection Scheme (DPS). The Dipsute Service and other DPS members will see a huge increase in registered deposits overnight.
