Housing Act 1998 Tenancies
Most residential leases are covered by the Housing Act 1988 which introduced assured tenancies and assured shorthold tenancies (ASTs).
Housing Act 1988
Under this Act, two types of tenancies can be created: assured tenancies and assured shorthold tenancies (ASTs). ASTs had to be created by serving a prescribed notice under Section 20 before the tenancy began, stating the tenancy would be an AST. If not, the tenancy would be an assured tenancy. ASTs could not be created for less than six months.
Housing Act 1996
This Act amended the previous one with the following changes, making residential tenancies easier for landlords:
- Tenancies created after February 1997 are automatically ASTs, so a Section 20 is no longer needed to create an AST
- To create an assured tenancy, the tenant must be advised in writing before the tenancy starts. The tenancy must state the tenancy being entered into is not an AST
- ASTs can be of less than six months. Courts cannot grant possession until the tenancy has run for six months, if the tenant was properly served notice and refused to leave.
Differences Between Assured Tenancies and ASTs
AST
An AST is created automatically and does not need any formal notice or procedure. It gives limited security of tenure to the tenant and the landlord can seek possession using a Section 8 notice but can also use a Section 21 notice without giving any reason.
There is no minimum time period for the tenancy and it can be fixed for any length, usually six or 12 months, or periodic, usually running month to month.
Assured Tenancy
An assured tenancy gives the tenant more protection if the landlord seeks possession. The tenant has the right to stay in the property unless it can be proved in court that the landlord has grounds for possession. The landlord would have to seek possession 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 or a periodic tenancy.
When ASTs and Assured Tenancies can be Used
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 does not exceed £100,000 p.a.
Tenancies that do not meet these criteria are not covered by the Housing Act 1988 and therefore cannot be assured tenancies or ASTs.
A typical AST is commonly for a fixed period of six 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 February 1997 has been the AST.
If a landlord lets a tenant move into a property and the tenant pays rent, there will at best be an AST providing it meets the criteria. This will be a periodic tenancy with the period equal to the period covered by the rent. So, if rent is paid weekly, it will be a weekly period tenancy. It is obviously better if the tenancy is created in writing.
