Residential landlords with tenancies of up to £100,000 a year are being reminded they will automatically default to an Assured Shorthold Tenancy(AST) from October 1st and deposits may have to be protected.
The AST threshold will increase to include all tenancies with annual rent of up to £100,000. Currently, only tenancies below £25,000 a year are classified as such.
The increase will give tenants paying higher rent the benefit of Tenancy Deposit Protection (TDP).
Richard Dawson-Gerrard, a commercial partner at Stephensons Solicitors LLP, said: “We would advise landlords who have taken a deposit for a property after 6th April 2007 with annual rent up to £100,000 to protect the deposit with one of the government-approved tenancy deposit schemes. This is because the legislation is retrospective in its effect.
“Deposits taken before 6th April 2007 do not have to be protected unless the tenancy agreement has been renewed. Letting agents will also need to notify their clients of the need to protect deposits.
“We would also advise landlords to ensure all tenants have ASTs in place on 1 October 2010 in addition to protecting any deposit. What may catch landlords out is that there is no period of grace for the changes to be implemented.”
Landlords who fail to protect a deposit taken after this date will not be able to serve a Section 21 notice on a tenant to begin possession proceedings when the property becomes an AST. They may also be ordered to pay the tenant three times the deposit amount as a penalty.
Richard added: “The new threshold will protect the deposits of a greater number of tenants, and disputes over deposits should be easier to resolve.
“The change is retrospective so I would urge residential landlords to review their tenancy agreements with a specialist solicitor to ensure they are fully up to date as a matter of urgency.”