The Assured Tenancies (Amendment) (England) Order 2010 comes into force at the end of this week (on 1 October 2010). The brevity of the Order itself belies its potential effect on the residential property market.
The Order increases the annual rental threshold for assured tenancies (i.e. the maximum rent payable under a tenancy before it is no longer afforded assured tenancy status) from £25,000 to £100,000.
Up until next Friday, a tenancy under which the annual rent payable exceeds £25,000 is a simple contractual tenancy with none of the rights and regulations afforded under assured tenancy legislation. However as of 1 October 2010, if the rent under that tenancy does not exceed £100,000 per annum it will automatically transform into an assured tenancy as will all new tenancies granted after 1 October 2010 under which a rent of up to £100,000 per annum is payable.
There are some fairly notable differences between contractual tenancies and assured tenancies, to do with, for example, pre-emption rights in favour of tenants, rent deposits, obtaining possession and uplifting rent. Landlords need to be aware of a change in the status of their current tenants and, if not, may find themselves caught out.
The brief terms of the Order also leave open a number of questions as to how these transformed tenancies will operate in practice. For instance, it is unclear from when a contractual turned assured tenancy is deemed to start. This date will be relevant in calculating, for example, the date from which a landlord can obtain possession, how and when the rents can be referred to the Rent Assessment Committee, etc.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
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The original publication date for this article was 27/09/2010.