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Tenancy law update: ASTs and ‘other’ lets

ASTs (Assured Shorthold Tenancies) were introduced in the Housing Act 1988; the Housing Act 1996 amended this legislation. Frances Burkinshaw discusses the impact on today’s lettings market.

Frances Burkinshaw

Signboards imageOne change in 1996 was that, providing the criteria were met for an Assured tenancy, the default tenancy would be an AST. Since then we have seen a raft of legislation around ASTs, most recently changes to the requirements for service of a Section 21 notice seeking possession. Many people are not aware that the Housing Act 1988 allowed for tenancies other than ASTs. One could enter into an Assured Tenancy and have the right to cite one of the mandatory Grounds for Possession within the agreement.

We don’t need to tinker with legislation. Leave the good landlords alone – chase the rogues.

Frances Burkinshaw image

Frances Burkinshaw

This would ensure, if proven, that possession would, if necessary, be granted through the courts.

The downside is that the notice needed is prescribed, a Section 8 Notice.

One must a) use the most up to date version of the notice and b) it must be completed correctly. Agents and Landlords were often advised not to use these tenancies in case there was an error in the Section 8 notice and any court proceeding would automatically fail.

Section 21 notices were not prescribed and could be written in any way the landlord chose providing dates etc. were correct. This notice is now prescribed and therefore care must be taken.

GROUND RULES

The tables have turned… with an AST, a long list of actions must have happened, prior to service, this is not the case with an Assured Tenancy with protection of one of the mandatory Grounds.

I am not suggesting that one should not arrange for gas safety or install a smoke detector etc. Quite the opposite! I am saying that the recent link of such things to Section 21 has added worries for landlords and a small error, eg, carrying out the gas safety a day late, would render the Section 21 notice invalid.

For example, Ground 1 can be used; inserted into the agreement and stating that the tenancy is an Assured Tenancy (not an AST), when the landlord has used the property as their home or intends to occupy it as their home in the future. If it has been used as a home it would be a ‘fact’.

Ground 3 can also be used when the property is used for genuine ‘holiday lets’. Once the holiday season is over one can let the property for a period of up to eight months (if there has been a genuine holiday let in the past 12 months), inserted to the agreement as above.

Neither require additional actions as detailed in the Deregulation Act 2015, so if, eg, a landlord was late in protecting the deposit, he still had the potential penalty under the deposit legislation but would be able to serve a valid Section 8 Notice seeking possession.

So, if letting an owner’s home, consider using an Assured Tenancy with protection inserted for the landlord under Ground 1 of the Housing Act 1988.

Other Mandatory Grounds include Ground 8 (2 months unpaid rent). Most people are only aware of this Ground!

Other types include Contractual Tenancies or Non-Housing Act Tenancies, where one or more requirement for any Assured or Assured Shorthold Tenancy are not met, eg:

  • the landlord is deemed to be resident i.e. lives in part of the property as his sole or principal home
  • the property is not the tenant’s sole or principal home
  • the rent exceeds £100,000 per year.

Landlords and Agents often still use an AST in these circumstances but the tenancy would not be an AST and none of the actions linked to an AST apply, so service of a Section 21 Notice is incorrect. A simple letter asking the tenant to leave at the end of the term suffices – with adequate notice under the Protection from Eviction Act 1977 i.e. one month if the rent is paid monthly.

The assumption that all residential tenancies are ASTs is incorrect and alternatives should be investigated.

Back in the 1970s the only safe properties to let were owners’ homes; we used the equivalent of an Assured Tenancy citing ‘Case 11’ (Ground 1 today) to be sure of gaining possession when the landlord wanted to reoccupy his home (assuming he had lived there before).

We have come full circle. Some are keen to return to rent capping, security of tenure with long-term tenancies. Don’t be fooled; the lettings market will not accept this and numbers of properties will drastically reduce.

There is and has been for years provision for long term lets. Investors in property may well be happy to agree to a three or five year tenancy with a reasonable rent increase written in to the agreement.

No landlord wants voids. It would still be possible to terminate the tenancy earlier in the case of a serious breach.

We do not need to tinker with this legislation. Leave the good landlords and tenants in peace – chase the rogues.

Frances Burkinshaw is a hugely experienced independent trainer available nationally for in-house or group training. 01892 783961 or 07887 714341 or frances@ivychimneys.co.uk

August 14, 2018

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