Assured Shorthold Tenancy (AST) threshold increased to £100,000.

From 1st October 2010 the rent threshold for Assured Shorthold Tenancies will be increased by £75,000 from an annual rental income ceiling of £25,000 to £100,000.
 
Essentially the changes mean that from the 1st October 2010 all Common Law tenancies with a rental income up to £100,000 will automatically become Assured Shorthold Tenancies (AST).
  
So what does this mean in real money?
 
Well let’s first understand the differences between a Common Law and an Assured Shorthold Tenancy Agreement.
 
A Common Law Tenancy agreement is an agreement to which the Housing Acts do not apply and is largely governed by case law and tradition. The method of terminating this form of agreement is usually agreed between the  landlord and tenant in the body of the agreement. The landlord will usually be able to terminate the tenancy in the event of a breach of the agreement by the tenant, or at the end of the term by service of a notice to quit.
 
An Assured Shorthold Tenancy Agreement is an agreement where certain aspects of the agreement are prescribed under law (Housing Act 1988 updated 1996 and soon to be 2010).
 
The criteria for an Assured Shorthold Tenancy Agreement as from 1st October 2010 are that:

• The annual rent must not exceed £100,000 
• The Landlord must not enjoy Resident Landlord status (i.e. live in all or part of the property)
• The tenant, or in the case of joint tenants, at least one of them must occupy the property as their main or principal home.(second homes, holiday lets are excluded.)
• The tenant must be an individual (this means that agreements where a Company is named as the tenant are unaffected by these changes.)

The two main changes to affect Landlords will be:

1. The tenant’s deposit must be protected by using an authorised tenant deposit scheme (TDS) as introduced by the Housing Act 2004.
2. The procedure for evicting tenants will be as laid out in the Housing Act 1988, so you will need to serve a section 21 or section 8 notice first (not a Notice to Quit as now). 

The change will be retrospective and apply to existing tenancies as well. If your current tenancy falls into this bracket you will need to comply with the regulations that apply to AST’s. This includes protecting rental deposits and using the correct procedures for gaining possession.
 
Now for the good bit, Peter Barry will take care of registering tenant’s deposits for all landlords in receipt of full management services and will also advise you regarding the termination of any tenancy, if and when necessary. Although it is not mandatory, Peter Barry will replace common law tenancy agreements with AST’s when any renewals arise.
 
So, if your property is fully managed with Peter Barry and the changes apply to you, you don’t need to do a thing as we will ensure that all necessary action is taken.