Whitehall… We have a problem!

Discussions with Government this week have led the NLA to discover that the long awaited Assured Shorthold Tenancy (AST) threshold increase – from £25k to £100k pa – may have a wider impact than was once thought.

(For those not in the know the £25k threshold is the maximum annual rent that may be charged per year for an AST. The original idea, in 1990, being that any rent over this is probably a luxury let and not in need of the same level of protection as the rest of the market.)

Over the course of the numerous reviews and consultations of the last few years a general consensus had developed that increasing the AST threshold to take account of inflation over the 20 years since the level was set would be generally beneficial.

The view was that extending the reach of ASTs is likely to increase transparency and generally make life a little easier for the bulk of landlords and tenants who are not involved with premium properties, but happen to have property in an expensive area.

However, in drafting this relatively simple piece of legislation the Government have reportedly run into a fairly dramatic problem. Due to a very boring, and probably best not dwelled upon here, technical matter there is apparently no way to change the threshold without making the changes retrospective.

This means that, not only will, all new tenancies with rent between £25k and £100k become ASTs by default, so will existing tenancies within this range. This change will parachute all of the rights and responsibilities of the Housing Act 1988 onto tenancies – as well as making tenancy deposit protection mandatory for them as of 1 October.

We are told that this was not the intention of the policy and as a result the Department for Communities and Local Government are working with the Ministry of Justice to minimise the impact of this – but as any landlords who fail to protect an existing deposit could still be found in breach of the law come October.

This seems somewhat unfair to us. Changes to the law and new regulation is one thing but to change the terms of agreed contracts, entered into in good faith by landlords and tenants, retrospectively by statute seems like a step too far.

One thought on “Whitehall… We have a problem!

  1. Isn’t it also true that extending AST rights of tenure to people paying £9,ooo rent per month could potentially bankrupt landlords if the tenant’s get into rent arrears and refuse to vacate.

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