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Residential landlords face rent threshold rise for assured shorthold tenancies

21 Oct 2010

Residential landlords are being urged to check their position, following a change in law that has seen the maximum rent level for assured shorthold tenancies quadruple to £100,000.

Previously, only tenants with annual rents of up to £25,000 had security of tenure. The change came in this month and applies to existing tenancies as well as to new ones, giving some tenants security of tenure for the first time. Tenants will be granted assured shorthold tenancy security if their agreement dates from March 1997 and here the landlord can recover possession once the fixed period of the tenancy has expired by giving the tenant at least two months’ notice.

More controversially, a tenancy that was granted before 1st March 1997 at a rent between £25000 and £100,000 will now become an assured tenancy, which may hit some landlords as they can only recover possession if they can establish that certain grounds apply.

The changes, which apply only in England, came in on 1st October, and any new residential tenancy of premises in England granted to an individual at a rent of up to £99,999 will be an assured shorthold tenancy by default.

Said property expert Colin Sim of Hay & Kilner solicitors in Newcastle upon Tyne: “The original threshold of £25,000 was set in 1990 so if this figure had been raised in line with inflation, the threshold would now be around £52,000. The £100,000 threshold shows how keen the government is to bring all residential tenancies under the umbrella of security of tenure, especially in London.”
He added: “The retrospective effect will be detrimental for landlords who have been letting their property to the same tenant for many years, but it seems to be seen as minor collateral damage”.

New tenancies and tenancy renewals will also be subject to the statutory deposit protection scheme. Whilst this only applies to deposits paid after 1st October 2010, or on tenancies renewed after that date, landlords are being recommended to adopt the scheme as good practice for all deposits held.

For further information please contact Colin Sim on 0191 232 8345 or email colin.sim@hay-kilner.co.uk.

Please note:
This article is not legal advice; it is intended to provide information of general interest about current legal issues. Please contact us to discuss how the contents of the article may affect you.