28 July 2014
A bombshell is about to descend on the lettings world, with news that Assured Shorthold Tenancies will extend to include rentals of £100,000 a year.
This, said specialist lawyer David Smith at a conference yesterday, will happen in October - ju
AST currently encompass properties which have a rental income of up to £25,000 a year. Under the latest Housing Act, AST properties are caught by other legislation, including health and safety regulations and compulsory tenancy deposit protection.
Rental properties which are worth more than £25,000 a year in income are currently barely regulated, other than by common law.
But, Smith told a gathering of upmarket agents including Knight Frank, Hamptons and Savills, this will be changed overnight by a Statutory Instrument this autumn.
He said that suddenly, rental properties where a deposit has been taken will be outside the law if that deposit has not been already protected by one of the three approved schemes. In central London, the majority of rental properties are worth more than £25,000 a year, with deposits alone often running at around £20,000 - none of them currently in protected schemes.
Smith warned: "It will be absolute chaos." He said the schemes were already struggling to cope with their workloads and that their finances were not stacking up.
He said that the Government needed to phase in the change, so that agents and landlords of more expensive rental properties had a timetable to work to. But this, he said, had not been done, and he added: "This Government does not understand the private rental sector. It simply doesn't get it."