The Assured Tenancies (Amendment)(
There are no transitional provisions. Consequently, the 1988 Act, as well as applying to new tenancies with effect from 1 October, will apply to existing tenancies where the rent exceeds the current threshold, which was set at £25,000 pa in 1990 and remains unchanged.
One of the principal reasons for raising the threshold is to bring more tenancies – and, in particular, lettings of shared houses to students – within the scope of legislative provisions requiring landlords to protect rent deposits with one of three authorised tenancy deposit schemes. Landlords who fail to comply with the requirements face harsh penalties. They may be required to pay tenants a sum equal to three times the amount of their rent deposits, as well as being unable to recover possession of their properties.
The position in respect of landlords that already possess rent deposits paid by residential tenants who, at the time the deposits were paid, did not qualify for protection but who will be brought within the scope of the tenancy deposit legislation with effect from 1 October, is ambiguous. Initially, the Communities and Local Government (CLG) advised that landlords would be required to protect such deposits under one of the authorised schemes.
However, although it is unable to interpret the legislation definitively (because this is a matter for the courts), its latest advice is that landlords will not immediately have to protect rent deposits that they already hold. None the less, it advises that this would constitute good practice. In addition, landlords will need to protect deposits where tenancies are renewed or where deposits are received on or after 1 October.
The new threshold will also affect landlords’ rights to recover possession. If a tenancy becomes fully assured under the 1988 Act, which the CLG accepts is possible in “a minority of cases”, the landlord will, to regain possession, have to establish one of the grounds set out in the Act. However, landlords will be able to recover possession from assured shorthold tenants after the initial six months of the tenancy or at the end of any longer fixed-term period agreed with the tenant, on service of two months’ notice. Where rental levels exceed the new threshold, tenancies are terminable by notice to quit.
The lack of transitional provisions may trigger test cases on how the legislation applies in practice. In the meantime, landlords and tenants will find answers to frequently asked questions at www.bpf.org.uk/en/files/bpf_documents/FAQs.pdf
Allyson Colby is a property law consultant
