Assured Shorthold Tenancies
Like the leasehold sector there have been a lot of legislative changes over time to balance the rights of tenants with landlords. The balance was geared on the side of the tenants with significant rights granted to them under the Rent Act 1977 but it did however create some unwelcome side effects within the bigger freehold/leasehold picture.
Freehold land costs increased as prospective landlords purchased instead of rented as they had no desire to take the risk that it was more than likely they would never see their properties returned to them in their own lifetimes!. By the late eighties, only 7% of all housing stock was privately rented. Added to all this was a major recession and it was easy to see why the private rental sector needed its fortunes reversing, not least to step into the gap left by councils who were not only selling their stock under Right to Buy but were not replacing them by building new stock.
So the Assured Tenancy was introduced under Part 1 of the Housing Act 1988 and between January 1989 and February 1997, nearly all new private lettings (whether by a private landlord or a Registered Social Landlord) were classed as such. The protections under the Rent Act 1977 were removed, controlled tenancies were converted into regulated tenancies, and rent controls were removed for property let after 1988. Unless any alternative agreement at the start of the tenancy were made then they automatically defaulted to an Assured Tenancy.
The Housing Act 1988 also provided 20 grounds for landlords to evict upon where the tenant had committed a breach of the tenancy agreement. The first 8 are mandatory (which means the judge has to award possession if proved) with grounds 9 onward being discretionary and often used to accompany mandatory grounds. The most common reason for landlords seeking possession is for rent arrears which is provided for by the following 3 grounds:
- Ground 8 (mandatory)
- Ground 10 (discretionary)
- Ground 11 (discretionary)
All 20 grounds can be read here.
Landlords still weren’t happy though because a) the Assured Tenancy did not go far enough in reviving the rental market which is what they were created for and b) they didn’t get an automatic right to get their property back at the end of the tenancy agreement.
So landlords then got the Assured Shorthold Tenancy (AST) under the Housing Act 1996 which came into effect from 28th February 1997.
MEETING THE CONDITIONS FOR AN ASSURED OR ASSURED SHORTHOLD TENANCY
A tenancy can be an assured or an assured shorthold if the following conditions are met:
- The landlord agrees to rent out accommodation with exclusive use the tenancy will almost certainly be an assured or assured shorthold;
- The landlord lives in a purpose-built block and rents out another flat in the same block they will not be a resident landlord and therefore the tenancy will be either assured or assured shorthold;
- The tenant has exclusive use of part of the accommodation but can also use other parts such as a communal living room or kitchen with someone who is not the landlord then the tenancy is likely to be an assured or assured shorthold;
- The tenant moved in between 15th January 1989 and 27th February 1997 but the landlord did not give a notice saying that the tenancy is an assured shorthold. If the tenant moved in after 27th February 1997 the tenancy can be an assured tenancy but only if a) a written notice was provided by the landlord before the tenancy started or b) if the tenant had a previous assured tenancy in the same accommodation with the same landlord. The latter is however quite rare.
A tenancy can’t be an assured or an assured shorthold if:
- It began, or it was agreed to begin, before 15 January 1989;
- The rent is more than £100,000 a year (from October 2010);
- The tenancy is rent free or for which the rent is £250 or less a year (£1,000 or less in Greater London)
- It is a business tenancy or tenancy of licensed premises (where alcohol is sold or consumed);
- It is a tenancy of a property let with more than two acres of agricultural land or a tenancy of an agricultural holding;
- It is a tenancy granted to a student by an educational body such as a university or college;
- It is a letting by a resident landlord, i.e. a landlord who lives on the premises such as a converted house. Even if the landlord rents out another part of it to a tenant, then again, the agreement is not an assured or assured shorthold, even if exclusive use is granted. The landlord doesn’t need to share any accommodation with the tenant to be held as a resident landlord – the fact that he lives on the premises is enough.
- It is a tenancy where the property is owned by the Crown or a Government Department: however, lettings by the Crown Estates Commissioners, the Duchy of Cornwall or the Duchy of Lancaster may be assured tenancies;
- It is a tenancy where the landlord is a local authority, a new town, a development corporation, a housing action trust, or a fully mutual housing association.
The Deregulation Act 2015 means that there are 2 different regimes in operation for the serving of s21 notices under an Assured Shorthold Tenancy. Which one is actually used depends on whether the AST commenced before or after the 1st October 2015 and more information on this can be read here.