Landlords should be aware of the limits of Assured Shorthold Tenancy (AST) as it is no longer applicable for many residential properties in London warns London estate agent Hurford Salvi Carr in its recently published half-yearly review. With entry level prices to the London residential property market continuing to increase and residential rents for many one and two bedroom rental properties following the upward trend, many tenancy renewals are now exceeding the legal threshold.
AST agreements were introduced through the Housing Act 1988 to protect the interests of all landlords and tenants in the private rented sector and have been the backbone of the rental market. However, as AST only covers properties with an annual rental income of up to £25,000, an increasing number of properties across the capital no longer qualify under this legislation. Clerkenwell property Price
Hurford Salvi Carr Lettings Manager Kari Trajer believes this could have consequences for both Landlords and Tenants alike. “Since 1997, the vast majority of new tenancies let to individuals have been let on ASTs. This is creating a misnomer for Landlords based on the assumption that the ASTs are regarded as appropriate for all rental agreements without realising that their rental value exceeds the £481- per week (£25,000 per year) legal ceiling of the AST.“This crucially means the theoretical ‘fast track’ legal ability to recover possession for rent arrears no longer applies and can lead to serious delays if any rent arrear disputes arise with the tenants. “
The increased use of sealed bids for rented properties, which were reported by Hurford Salvi Carr earlier this year, has been just one result of the housing shortage and a contributing factor to the rising prices now exceeding the legal ceiling of AST.
In its recently published half yearly report, Hurford Salvi Carr outlines how the average weekly rental value for a two bedroom property has risen above £480- per week across the West End, City and Docklands.
Hurford Salvi Carr Lettings Manager Kari Trajer continues: “At the present time, the Government is not scheduling amends to increase the legal ceiling of the AST, so Hurford Salvi Carr recommends Landlords and Tenants to be aware when letting or extending an existing tenancy of residential property particularly in the high value London market and the impact this will have on possible possession.
“I believe the legal ceiling of the AST will have to be raised sooner rather than later in order to protect Landlords and reduce the number of delays to secure vacant possession for rent arrears. Until then however, it is crucial that landlords understand the implications of Tenancy Agreements and make sure that the correct form of Tenant agreement is used by their agent.”
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