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Assured tenancy threshold to increase
The Government proposal to increase the Assured Shorthold Tenancy (AST) threshold had been broadly welcomed as an attempt to offer greater clarity and transparency for landlords and tenants.
For reasons the government has not fully explained, it seems that a quirk of the process means the change will be retrospective and will be applied to existing tenancies. 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 no longer be able to negotiate individual terms for their tenancy and the rights and responsibilities associated with the Housing Act 1988 will be extended to these higher rent properties.
David Salusbury, Chairman, NLA, said “Although we are still piecing together the facts, the retrospective nature of this change is highly regrettable, and it could have a wide-ranging impact on the letting of private residential property. For example, landlords in this higher rent bracket will have to protect deposits for the first time. If they fail to do so by October 1 2010 they could be in breach of the law. We are told the courts are being forewarned.
“The NLA believes the Government is rushing through this change without fully thinking through the consequences. We call for greater consultation to ensure this measure does not have a negative impact on the private-rented sector. We will continue to provide the most up-to-the minute help and advice on the issue to landlords and have published a guide to help landlords comply with the law. The NLA will continue the press the Government for further consultation.”
Susan Hughes Thomas, President of Arla and proprietor of The Home Management Company in Bushey said “The final details relating to the proposed increase in the threshold allowed to grant an Assured Shorthold Tenancy from the current rent level of £25,000 per annum have not yet been clarified and the change will not be take place, we understand until October 2010 at the earliest. As such it is difficult to say more at this stage, however ARLA (The Association of Residential Letting Agents) would see this as a positive step to extend the protection of the Housing Act 2004 to tenancies not currently covered by this legislation. One group who would benefit would be many student HMO’s which by virtue of their combined annual rents fall outside the current threshold of £25,000.”
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