Assured Shorthold Tenancies (ASTs)

How did the 1996 Housing Act Change the way AST's are created?

The 1996 Housing Act came into force on 28 February 1997 and changed the way Assured Shorthold Tenancies were created. The typical AST will be usually be for a fixed period of 6 or 12 months or a monthly periodic tenancy from the start. Such tenancies can be created orally and will still be legal tenancies. this means that the default tenancy since 28 February 1997 has been an AST. For example if a landlord lets a tenant move into a property and the tenant pays rent, there will at best be an AST. This will be a periodic tenancy with the period equal to the period covered by the rent. So if rent is paid monthly it will be a monthly periodic tenancy.

- Tenancies created after 28 Feb 1997 are automatically ASTs not automatically assured tenancies as before
- A section 20 notice is no longer needed to create an AST
- To create an assured tenancy the tenant has to be advised in writing before the tenancy starts. No formal notice is needed and the wording could simply be included in the heading of the tenancy agreement
- ASTs of less than 6 months can be created. However courts cannot grant possession until the tenancy has run for six months. If the tenant was properly served notice and refused to leave (unless of grounds for possession under Schedule 2 can be established)

This made residential tenancies more attractive for landlords and there has since been a boom in landlords buying residential property for investment purposes and using ASTs as the tenancy agreement.

Differences between Assured Tenancies and ASTs

Assured Tenancies

- It gives the tenant more protection if the landlord seeks possession
- The tenant has the right to stay in the property unless it can be roved in court that the landlord has grounds for possession.
- The landlord would have to seek possession of the property by serving a Section 8 notice and proving one or more of the grounds in Schedule 2 of the 1988 Housing Act
- A section 21 notice cannot be issued for assured tenancies.
An assured tenancy can be for a fixed period but it is more likely to be a periodic tenancy running indefinitely from month to month.

Assured Shorthold Tenancies

- It is created automatically and does not need any formal notice or procedure.
- It gives limited security of tenure to the tenant
- The landlord can seek possession using a Section 8 notice (as for an assured tenancy) but can also use a Section 21 notice without any reason.
- There is no minimum time period for the tenancy.

An AST can also be periodic or fixed term. If periodic it will usually run from month to month. Most ASTs are for a fixed period. This can be of any length but will typically be for 6 months. This 6 month period links in with the minimum security of tenure period.

When can Assured Tenancies & Assured Shorthold Tenancy (AST) be use?

Assured tenancies and ASTs can only be created if;

- The tenant is an individual, not a company, charity or trust.
- The property is the tenant's only or main principal home
- The landlord is not a resident landlord
- The rent is less than £25,000 per year

Tenancies that do not meet these criteria are not covered by the housing act 1988 and thus cannot be assured tenancies or ASTs.

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