The Death Knell for the six month Assured Shorthold Residential Tenancy?
Since its introduction in 1988, the six month Assured Shorthold Tenancy (AST) has become the tenancy of choice for virtually all landlords in the private sector.
Nick Lambert, commercial litigation solicitor at Wake Smith, looks at potential changes being considered in order to deliver a fairer, better quality and more affordable private rented sector in England and Wales.
“The Government takes the view that there is a growing need for longer, more secure tenancies than the minimum six months offered by the assured shorthold tenancy regime.
“The short initial fixed term period can result in a tenants feeling insecure and that their house is not their home.
“Many tenants can feel disempowered to challenge poor property standards and are unable to plan for the future.
“Landlords can also benefit from longer tenancies. An empty property does not generate any rental income and finding new tenants can be costly.
“Furthermore, where tenants know that they will be living in a certain property for a longer period of time, they are more likely to take proactive steps to look after the property and contribute to the local community.
“Landlord’s concerns often focus on not being able to recover their assets when they need to or not being able to evict difficult tenants, such as those in rent arrears
“Therefore, since August last year, as part and parcel of its efforts to deliver a fairer, better quality and more affordable private rented sector in England and Wales, the Government has been considering introducing a new minimum three year tenancy which would have the following features:
- An opportunity for both the landlord and tenant to leave the agreement after the initial six months if dissatisfied.
- If both landlord and tenant are happy, then the tenancy would continue following that six month break clause.
- Thereafter the tenant would be able to leave the tenancy by providing a minimum of two months’ notice in writing at any time.
- Landlords could recover their property during the three year fixed term only if they had reasonable grounds. These would include all existing grounds, for example antisocial behaviour and the tenant not paying the rent. Additionally, there would be grounds which covered landlords selling the property or moving into it themselves.
- Rents could only increase once per year at whatever rate the landlord and tenant agree but the landlord would have to be absolutely clear about how rents would increase when advertising the property.
- Exemptions would be put in place for tenancies which could not realistically last for three years, for eg holiday lets and student accommodation.
“It seems to us that the Government is likely to push ahead with these proposals. It is to be hoped that whatever legislation is introduced will strike the correct balance between tenants’ need for protection and landlords’ needs to regain their property if circumstances demand.
“We shall see – but the odds are that the days of the six month AST are numbered.”
For any further questions or advice please contact Nick Lambert at firstname.lastname@example.org or on 0114 224 2036.