What you need to know about Assured Shorthold Tenancy Agreements
Introduction to Assured Shorthold Tenancy Agreements
An Assured Shorthold Tenancy (AST) is a type of tenancy agreement in the UK. It is a legal agreement between the tenant and the landlord, which sets out the rights and responsibilities of each party. The agreement will include the length of time the tenant can stay and what the tenant has to pay for rent.
ASTs are regulated by the Housing Act 1988, which states that the landlord must provide the tenant with a written tenancy agreement, and the tenant has certain rights and responsibilities during the tenancy. These include the right to quiet enjoyment of the property, the right to receive reasonable notice before the tenancy ends, and the responsibility to pay rent on time.
What is the minimum length of an Assured Shorthold Tenancy?
An Assured Shorthold Tenancy (AST) is the most common type of tenancy agreement used in the UK and usually lasts for a minimum period of six months. The agreement can be agreed for a longer period, e.g. twelve months. This type of tenancy allows the tenant to remain in the property for the first six months, or initial fixed period.
The main requirement with this type of agreement is that the landlord and tenant agree on the minimum term and amount of rent. An Assured Shorthold Tenancy ensures that the tenant is protected in terms of the sum of rent. This means that the tenant has the right to challenge excessively high rent or changes in the agreed rent. For more information on this see the section on Market Rent below and our section 13 notice guide. For more information on tenants' rights, see Tenants' Rights in an Assured Shorthold Tenancy.
In an Assured Shorthold tenancy, the landlord has the right to guaranteed possession after the initial six month period in accordance with the Housing Act 1988.
The Housing Act 1988 defines several main criteria for an Assured Shorthold Tenancy to be set up:
* The property must be let as separate accommodation
* The property must be the tenant’s main or principal home
* The tenant should be an individual
However, there are some circumstances in which a shorthold tenancy cannot be used. For example, when a property is:
* Being let for a very high rent (more than £100,000 per year)
* Being let for a very low rent / at no cost
* Being let as a holiday home
* Being let to a tenant while the landlord is residing in the same property
* Being let with more than two acres of agricultural land or an agricultural tenancy
* Being let under a tenancy which began prior to the 15 January 1989, or which was formerly a protected tenancy
* Being let to a private limited company
* Owned by the Crown or a government department
Since the introduction of the Assured Shorthold Tenancy in 1997, it has become the main type of tenancy agreement used by most landlords to let residential properties.
All tenancies which started on or after 28th February 1997 are now automatically Assured Shorthold Tenancies, unless the required steps were followed to set up an Assured Tenancy. Most residential properties are let using an Assured Shorthold Tenancy, providing the property is let to an individual and is a separate property to the landlord’s. However, there are circumstances in which an Assured Shorthold Tenancy cannot be used as a form of tenancy.
The Housing Act 1988, revised in 1996, aimed to improve the rights of both landlord and tenant and to make letting property more appealing. The Assured Shorthold Tenancy was introduced and is now the most commonly used type of tenancy agreement.
The Housing Act 1996 gave tenants the right to question excessively high or increasing rates of rent, which resulted in a higher number of people choosing to rent properties. Renting is now viewed by some as a more feasible and practical option, compatible with society’s increasingly flexible lifestyle choices.
How do you know if you have an Assured Shorthold Tenancy Agreement?
There are a number of factors which will determine whether or not an Assured Shorthold Tenancy has been agreed.
You will have an AST if:
* You moved into the property on or after 28th February 1997
* You are renting from a private landlord
* You have rights which entitle you to privacy in the property where the landlord cannot enter the property without mutual agreement
* The landlord is not living in the same property as you
* You are paying less than £100,000 per annum in rent.
You may also have an Assured Shorthold Tenancy if you moved into the property between 15th January 1989 and the 28th February 1997, and the landlord made you aware that you were entering into an Assured Shorthold Tenancy agreement.
What obligations do tenants have under an Assured Shorthold Tenancy?
Tenants under an Assured Shorthold Tenancy (AST) are legally required to meet certain obligations in order to ensure that their tenancy is successful.
These Tenant obligations are outlined in the Housing Act 1988, and they include:
1) Paying rent on time:
Tenants must pay their rent on or before the date specified in the tenancy agreement, or as otherwise agreed with the landlord. Failure to do this could result in a landlord pursuing legal action to reclaim rent arrears.
2) Keeping the property in good condition:
Tenants must maintain the property to a reasonable standard during the tenancy, including keeping the property clean and making sure that any damage caused during the tenancy is repaired or compensated for by the tenant.
3) Not causing a nuisance to neighbours:
Tenants must behave in a way that does not disturb the peace of other tenants or neighbours. This includes obeying noise restrictions, not playing loud music after a certain time, and making sure that any guests do not cause a nuisance.
4) Notifying the landlord of any repairs needed:
Tenants must inform their landlord of any repairs or maintenance that are needed. The landlord is legally obliged to carry out repairs when they are reported.
5) Allowing the landlord to inspect the property:
Tenants must allow their landlord to inspect the property periodically, usually once every 6-12 months. This is usually to ensure that the property is being maintained to a reasonable standard.
6) Not subletting or assigning the property:
Tenants must not sublet or assign the tenancy to anyone else without the landlord’s permission.
7) Abiding by the terms of the tenancy agreement:
Tenants must adhere to all of the terms and conditions of their tenancy agreement, including any restrictions on pets, guests, or the use of the property.
By following these obligations, tenants can ensure that their tenancy is a success and that they remain in good standing with their landlord.
How much notice must the landlord give to increase the rent under an Assured Shorthold Tenancy?
In the United Kingdom, landlords of an Assured Shorthold Tenancy (AST) must give the tenant at least two months' notice in order to increase the rent. This is in accordance with the Housing Act 1988, which states that any increase in rent must be given at least two months before the change is due to take effect.
The two months' notice period allows the tenant enough time to consider their options and decide whether they are willing to accept the new rental amount. During this time, the tenant will also be able to explore their legal rights and discuss the rent increase with the landlord, if they choose to do so.
It is important to note that landlords are not allowed to increase the rent more than once a year, unless the tenancy agreement specifically states otherwise. Additionally, the tenant has a right to dispute any rent increase that they feel is unreasonable. In such a scenario, the tenant can contact their local housing authority for advice and assistance.
In summary, landlords of an Assured Shorthold Tenancy in the United Kingdom must give the tenant at least two months' notice if they wish to increase the rent. This is to ensure that the tenant is given enough time to consider their options and explore their legal rights.
You can get a Rent Increase form here
How much can the landlord charge for a deposit under an Assured Shorthold Tenancy?
In England and Wales, when a landlord and tenant enter into an Assured Shorthold Tenancy (AST) agreement, the landlord is entitled to ask for a 'security deposit' from the tenant. This deposit is generally intended to cover any damage or unpaid rent during the duration of the tenancy.
Under the Tenant Fees Act 2019, a landlord can only charge a maximum of five weeks' rent as a security deposit for an AST agreement. For example, if the rent for the AST is £500 per month, the landlord can ask for a maximum deposit of £2500.
The landlord must also ensure that the security deposit is stored in one of three Government-approved tenancy deposit schemes, where it will remain until the end of the tenancy. This is to ensure that the security deposit is returned to the tenant in a timely manner, or that any disputes over the return of the deposit are resolved quickly.
What are the rules for ending an Assured Shorthold Tenancy?
An Assured Shorthold Tenancy is meant to provide the tenant with security of tenure and the landlord with the right to possession.
At the end of an Assured Shorthold Tenancy, the tenant must vacate the property and return it to the landlord in the same condition as it was at the beginning of the tenancy, barring normal wear and tear.
The tenant must give the landlord a minimum of two months’ notice in writing, unless an earlier date has been agreed in the Tenancy Agreement. The written notice must include the date by which the tenant intends to vacate the property, as well as their full name, address and signature.
The tenant must also ensure they comply with any other obligations specified in the Tenancy Agreement, such as paying all rent and bills due, and returning any keys to the landlord.
When the tenant has vacated the property, the landlord must return the tenant’s deposit, minus any deductions for any damage or unpaid rent, within 10 days. The landlord must provide the tenant with a detailed inventory of any deductions made from the deposit.
Finally, the tenant must inform the relevant utility companies and local council of the end date of their tenancy, so that the bills and council tax can be transferred to the new occupier.
What happens if the tenant does not pay their rent under an Assured Shorthold Tenancy?
If a tenant does not pay their rent under an Assured Shorthold Tenancy (AST) in the UK, the landlord has the right to take legal action to reclaim the money. A landlord can apply to a court for an order to evict the tenant and regain possession of the property.
The landlord must first serve a Section 8 Notice to the tenant. This document sets out the amount of rent arrears, states that the landlord intends to take back possession of the property and sets out a period of time within which the tenant is required to make payment of the arrears or face eviction.
If the tenant fails to make payment of the arrears within the period specified in the Section 8 Notice, the landlord can apply to the court for a Possession Order. This will grant the landlord the legal right to repossess the property.
At the same time as applying for the Possession Order, the landlord can also make an application to the court for a Money Judgment. This will make the tenant legally responsible for the arrears, and the court can also order the tenant to pay the landlord’s legal costs.
How is an Assured Shorthold Tenancy different to an Assured Tenancy?
There are two main types of tenancy agreements: Assured Shorthold Tenancies and Assured Tenancies.
Assured Tenancies are often referred to as "Full" or "Ordinary Assured Tenancies". Both these types of tenancy were introduced to promote lettings and allow landlords to charge the full market rent.
The key difference between the two types of tenancy is the legislation regarding the landlord regaining possession of the property.
AST Possession Orders
An Assured Shorthold Tenancy entitles the landlord to a possession order immediately after the initial agreed period, which is usually for six months. The landlord is therefore able to evict the tenant after the initial fixed term without a legal reason. If this is the case and the landlord does not wish to renew the tenancy then they are obliged to give at least two months' notice to end the tenancy.
An Assured Tenancy is considered to give the tenant more security, as after the agreement has ended the tenant can remain in the property until the landlord obtains an order of possession from the courts.
The landlord needs to prove to the court the grounds for repossession, for example, the tenant has missed rent payments, or the terms of the agreement have been disregarded. The landlord is required to inform the tenant in writing if they are to seek possession of the property through a court order. The tenant is not expected to move out of the property until an order has been issued by the courts. When the tenant is issued with an order they are required to leave the property by the date shown on the court order.
Market Rent and Assured Shorthold Tenancies
Under both types of tenancy the landlord is encouraged to charge a full market rent. The market rent is dependant on rent charged for similar properties in the area and the number of properties available in the area.
With Assured Tenancies and Assured Shorthold Tenancies the tenant and landlord are required to agree on the rent at the start of the tenancy. With an Assured Tenancy the rent must remain at the agreed rate until the end of the fixed term, unless the landlord and tenant agree to change it or rent changes are stated in the agreement.
At the end of the fixed term of an Assured Tenancy the rent can be increased, provided:
* The tenancy agreement has guidelines for rent increases
* The landlord gives written notice of the intended increase
* The landlord gives written notice of a change to the terms of the tenancy
The landlord is required to give the tenant notice of at least one rental period, which is usually one month, before increasing the rent. If the tenant challenges the increase in rent this will not threaten their ability to remain in the property, unless the landlord has other grounds on which they may evict the tenant.
With an Assured Shorthold Tenancy, the landlord may choose to increase the rent when the agreement is renewed after the initial period.
If the tenant does not agree to the rent increase, the landlord may choose to evict the tenant rather than forego the required rent increase. If the tenant wishes to remain in the property, it is often the case that they agree to the rent increase.
Both Assured Tenancies and Assured Shorthold Tenancies enable the tenant to refer excessively high rents to the Rent Assessment Committee during the first six months of the tenancy. The Rent Assessment Committee is independent of both local and central government and usually consists of three people: a lawyer, a property valuer and a lay person.
The aim of the committee is to decide on a reasonable market rent for the property being let. The rent charged for similar properties in the area let on Assured Tenancies and Assured Shorthold Tenancies will be analysed to enable the committee to reach a decision. The market rent set by the committee will then be the highest legal rate the landlord can charge. There are six rent assessment panels in England and Wales. No fees are charged for asking the committee to set a market rent for a property.
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