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Changes to ASTs

The government has published a response to the Rugg Review.

One of the proposed changes is that the upper limit threshold on Assured and Assured Shorthold Tenancies (set at £25,000 by para 2(1)(b) of Schedule I of the Housing Act 1988) should be raised to £100,000.

Section 2A of the Act allows this amount to be easily varied by Stautory Instrument and we have heard on the grapevine that the government is minded to do this as soon as October this year.

This will have far reaching consequences, particularly in the South-East as the majority of higher value tenancies that were outside the Act will not be brought into it. This will mean a large increase in the number of tenancies requiring to have their deposits protected and changes in the way possession proceedings are brought for these tenancies.

There are some important uncertainties. Will it be the case that the raise will be retroactive such that all tenancies under a rent of £100,000 per annum will automatically fall inside the Act? If so, this will affect tenancies already in place and will mean that their deposits will need to be placed in protection.

It would be better if the change was made so that only new tenancies after the start date were caught. However, in that case it will be necessary to bear in mind that renewal tenancies will drop inside the Act.

2 Comments

  • david anthony 27th January 2010 at 6:17 pm

    I was most interested in your note re. £25k Upper limit to ATs and ASTs
    the majority of HA Tenancies in Prime Central London (except for studio flats and smaller i bed units ) have annual rents above £25k
    The current limit has been in operation for over 20 years.
    Is there any definitive date set for raising the limit ?
    I await to hear with interest
    Kind Regards
    David Anthony

  • PainSmith 27th January 2010 at 8:26 pm

    It is expected to change on 6 April 2010.

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