Newsletter | September 2010 | New legislation could catch out thousands of landlords.

The annual rental threshold for Assured tenancies, including Assured Shorthold tenancies, will be increased from £25,000 per annum to £100,000 per annum from 1st October 2010.  This was announced in March in order to give the Private Rental Sector the opportunity to prepare for the change. The change could have profound effects for landlords - in particular those who manage properties themselves.

Individual tenants (not corporate tenants) will have the benefits of the protection of the Housing Act 1988 – principally security of tenure.  Additionally, they will have the benefit of tenancy deposit protection.

Landlords will need to ensure that deposits for tenancies brought within this new threshold entered into on or after 6th April 2007 (when the deposit protection legislation came into effect) are registered with one of the three Government-approved tenancy deposit schemes.  Failure to comply with this requirement means a landlord will not be able to use Notice Only possession to recover their property.  

It is essential that landlords are aware that this legislation does not provide for any transitional arrangements and will affect all existing and new tenancies from 1st October.

Landlords will also need to comply with the full legal framework associated with Assured Shorthold tenancies.

W. A. Ellis urges landlords and agents to register the deposits prior to 1st October to comply with the 14 day requirement and to avoid penalties being imposed under the legislation.  Deposit schemes are able to register deposits ahead of 1st October.  There is no legal requirement for agents to notify landlords and tenants of this change but Managing Partner Lucy Morton is urging all agents to do so as, in her opinion, it is regarded as best practice.  It is also essential to issue variation of contracts to ensure that the tenancy agreements comply with the AST requirements.

When a deposit has been passed to the landlord for tenancies entered into since 6th April 2007, W.A. Ellis say agents should be aware of a potential liability if they fail to ensure that the deposit has been protected by the landlord.

Landlords and agents need to be ‘ahead of the game’ and make sure all documentation is in place before 1st October in order to avoid a last minute panic which could then lead to penalties.  W. A. Ellis is in the throes of issuing the documentation now and protecting the deposits.