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What is an Assured Shorthold Tenancy?

10th December 2018

Often abbreviated to AST, an Assured Shorthold Tenancy is perhaps the most common type of tenancy landlords will have to deal with. It is also very easy to get wrong if you’re unfamiliar with the rules surrounding it.

By default, most lettings will fall under the AST. It exists to protect tenants, and allow landlords to more easily gain back possession of a property when things go wrong. In order to be considered an AST, three conditions must be met:

  • The property must be rented to an individual (not a company)
  • The property must be the tenant’s main residence
  • The landlord must not reside in the property

As a rule, having an AST means that providing the tenant is not in arrears with his/her rent, and abides by the rules set out in the tenancy agreement, he/she is entitled to live in the property for an agreed term. This also means that as a landlord, you have full entitlement to gain back full possession of the property after the agreed term, with the tenant having no further rights of occupation.

The terms of an AST and what they mean

By law, an AST can only be used by landlords renting in the private sector, and by housing associations, in England and Wales. Rules and laws will differ in Scotland, and landlords dealing with property in Scotland should therefore consult local property laws.

Providing the above criteria are met, an AST is usually granted for a fixed term which is normally set for either 6 or 12 months, although there is no law to state that there is a minimum, and under some conditions, landlords might have reason for the term to be less or more – they can be granted up to a term of 7 years.

After the term of the agreement has lapsed, the landlord has the right to claim back the property, or to grant the tenant a new fixed term AST.

What isn’t included in an AST?

If a property doesn’t fall into one of the three conditions mentioned above, then an AST may not be used. These include:

  • Holiday lets
  • Public Houses
  • University halls of residence
  • Agricultural lets
  • Company lets
  • Lets where the rent equals less than £250 per annum (or £1,000 in London)
  • Lets where the rent equals more than £100,000 per annum

Issuing the contract

As with all lettings, when issuing a contract you need three things; an offer, a consideration, and an acceptance. To be valid, the contract, whether an AST or other type of tenancy, needs to be signed by all parties, and should state the amount of rent required and when it should be paid, the term/length of the tenancy, who is responsible for things like repairs and faults, and what the process is for dealing with such repairs.

Remember that an AST is a legal contract, and as such it is vital that it is set out in the correct manner. Any errors could lead to the contract being invalid. If you’re not sure about how to issue an AST, always seek advice.

A landlord is entitled to use his/her own wording in the contract. There are numerous guides and templates available online to help. But as mentioned above, make sure everything is correct, and get it checked by someone who knows what they’re doing if you’re not sure.

It’s not legally required that you ask for references when using an AST, but most landlords do. It’s a good opportunity to check that the tenant is who they say they are, to carry out a credit check, an employment history, and confirmation of income.

Terminating an AST

Assuming the tenant does not default on any of the rules set out in the contract, the AST will end when the term set out in it expires. At that point, the landlord can either issue a new AST, or advise the tenant of his/her intention to claim back the property, usually under a section 21 (see below).

However, there may be situations where a landlord wishes to repossess a property before the term ends. Here are the 2 ways in which a landlord may gain possession of a property:

[sub] Section 21 Notice

The Section 21 is commonly known as a no fault eviction, and if the landlord does not want to renew the AST after the term has ended, this is the notice he/she should serve in order to gain back the property. It’s a requirement when issuing a section 21 that the tenant is given 2 months’ notice, but no reason need be given.

[sub] Section 8 Notice

If a situation arises where a tenant has broken the terms set out in the AST, then the landlord can issue a Section 8 Notice in order to evict them from the property. Most commonly, this might happen when a tenant is in arrears with rent, or has caused damage to the property.

On being issued with a Section 8, the tenant has a right to challenge the notice in court, where he/she is able to demonstrate reasons why he/she should not be evicted. This is where it is important to get the terms of the AST absolutely right, as any errors in the contract can make it void. A tenant can only be evicted under Section 8 if the court grants the order to do so.

 

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