Factsheet 18a - The Assured Tenancies (Amendment)(England) Order 2010

    

The Assured Tenancies (Amendment)(England) Order 2010 

Commencement:

The Assured Tenancies (Amendment)(England) Order 2010 comes into force on 1st October 2010.

Scope:

This Order applies only in England. It does not apply in Wales, Scotland or Northern Ireland.

The Order increases the existing ‘high rent’ upper limit for assured shorthold tenancies from £25,000 per annum to £100,000  with effect from 1st October 2010.

Legislative Context:

The Housing Act 1988 (“the 1988 Act”) introduced assured tenancies from 15 January 1989. The Act provides that all tenancies take the form of assured tenancies or assured shorthold tenancies unless they come within one of the exceptions set out in Schedule 1 to the Act.  One of these exceptions defined a high rent threshold of £25,000 per annum.  Above this rent threshold a landlord was obliged to operate the tenancy outside the statutory framework of the Housing Act 1988, and such tenancies took effect as common law or ‘general’ tenancies.

The recent legislation amends paragraph 2 of Schedule 1(2) of the Housing Act.  The effect of the Order is to increase the existing upper limit for assured (including shorthold) tenancies from £25,000 per annum to £100,000 with effect from 1stOctober 2010.  It seems likely that the new rental threshold may affect the existing rights of those landlords and tenants who have already taken out tenancy agreements prior to the introduction date, as well as having consequential issues for tenancy deposits (see below).

Raising the threshold to £100,000 brings all tenancies, except those with the very highest rents, under the protection of the Housing Act 1988 and restores the position intended in the original legislation, to exclude only the tenancies at the very top end of the market. Also the threshold will not need to be reviewed again for several years.

Pre-existing Tenancies:

Tenancies granted prior to 1st October 2010

As announced by Government earlier this year, the Order is expected to apply to existing tenancy agreements granted prior to the introduction date. In this case, a general tenancy agreement with an annual rent of between £25,000 and £100,000 per annum will automatically become assured shorthold on 1st October 2010.  It is hoped that Government will issue further and more detailed guidance on these transitional cases in due course.

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