Why You Should Stick with AST as a Landlord.

An AST, or Assured Shorthold Tenancy, is a type of tenancy that can be granted by private landlords or housing associations if the tenancy began on or after January 15th, 1989, the property is the tenant’s main residence, and the landlord does not live in the property. However, a tenancy cannot be an AST if it began or was agreed upon before January 15th, 1989, the rent is over £100,000 per year or under £250 per year (or £1,000 in London), it is a business tenancy or tenancy of licensed premises, it is a holiday let, or the landlord is a local council.

There are several advantages for a landlord to have an AST. One advantage is that it provides a clear legal framework for the landlord-tenant relationship. This can help to protect the rights of both parties and reduce the likelihood of disputes. Additionally, an AST allows landlords to regain possession of their property at the end of the fixed term without having to provide a reason, as long as they follow the correct legal procedures. This can provide greater flexibility for landlords who may need to sell or move back into their property.

Contracts

An Assured Shorthold Tenancy (AST) typically lasts for a duration of six or twelve months. Before the tenancy begins, the tenant must be provided with a contract to sign. This tenancy agreement outlines the amount of rent due, the party responsible for repairs, and the length of the tenancy. While landlords are generally responsible for major repairs such as those to the roof, walls, windows, doors, wiring, and plumbing, the contract should specify who is responsible for other tasks such as garden maintenance.

Under an AST, tenants are expected to take good care of the property and perform routine tasks such as changing light bulbs. One advantage of an AST for landlords is that it clearly outlines the responsibilities of both parties, reducing the likelihood of disputes over maintenance and repairs. This can help to ensure that the property is well-maintained and can save landlords time and money in the long run.

Deposits

At the beginning of an Assured Shorthold Tenancy (AST), it is common for landlords to collect a deposit from the tenant. This deposit serves as a safeguard against potential damages to the property or unpaid rent when the tenant moves out. Landlords are required to protect the deposit in one of three tenancy deposit protection schemes approved by the government.

At the end of the tenancy, the deposit should be returned to the tenant. However, landlords are permitted to make reasonable deductions from the deposit if the tenant has caused damage to the property or has fallen behind on rent payments. One advantage of collecting a tenancy deposit for landlords is that it provides a financial safety net in case of damages or unpaid rent, reducing the risk of financial loss.

Inventory

It is important for landlords to create an inventory for each new tenancy. This inventory should include a detailed description of the property’s condition and contents, along with photographs. Before moving in, the tenant must review, agree to, and sign the inventory document.

Having an inventory can be advantageous for landlords in the event of a tenancy deposit dispute at the end of the tenancy. The inventory provides a clear record of the property’s condition at the start of the tenancy, making it easier to determine if any damages have occurred and if deductions from the deposit are warranted whilst also providing a fair framework that the tenant can also benefit from.

Rent Increases

During the fixed term of an Assured Shorthold Tenancy (AST), landlords are not permitted to increase the rent price specified in the tenancy agreement, unless the contract explicitly states when and how rent increases can occur. However, once the fixed term has ended, landlords are free to increase the rent.

One advantage of this for landlords is that it provides them with the flexibility to adjust rent prices in response to changes in the market or their own financial needs. This can help landlords to maintain profitability and ensure that their rental income keeps pace with inflation and other costs such as increases in the interest rate.

Repairs & Maintenance

If a tenant requests repairs or if damage is discovered during periodic inspections, landlords are responsible for conducting the necessary work or arranging for a reputable tradesperson to complete the repairs. Landlords must provide their tenants with at least 24 hours’ notice before accessing the property.

In addition, landlords are legally required to arrange for an annual gas safety inspection and to provide their tenants with a copy of the gas safety certificate once the inspection is complete. These may seem like burdens but the advantage of fulfilling these obligations for landlords is that it helps to ensure that their property remains in good condition and complies with legal requirements, reducing the risk of disputes or legal action.

Renewals

When an Assured Shorthold Tenancy (AST) comes to an end, tenants have several options. They can request a new fixed term contract, but should be aware of any renewal fees and potential rent increases. Alternatively, they can choose to leave at the end of the fixed term, although landlords may require notice before they do so. If the tenant stays beyond the fixed term without signing a new contract, the agreement becomes periodic and rolls from month-to-month at the same rent. Finally, tenants may have the option to leave before the end of the fixed term if the contract includes a break clause.

One advantage of these options for landlords is that they provide flexibility in managing their property. Landlords can choose to renew the tenancy with the same tenant, adjust rent prices, or find new tenants if desired. This can help landlords to maintain profitability during inflationary/high interest rate periods as well as ensuring that their property is consistently occupied by reliable tenants.

Evictions

Tenants who rent on an Assured Shorthold Tenancy (AST) have some protection against eviction. Landlords must provide tenants with notice to leave and must serve this notice in the correct manner. To evict tenants, landlords must obtain a court order and follow a set of procedures. The most common forms of eviction notice are section 21 and section 8 notices. While no grounds for eviction are required for a section 21 notice, a reason must be provided for a section 8 notice.

It is important for landlords who rent their property on an AST to understand the rules and procedures surrounding this type of tenancy. Understanding and following these rules can help to ensure that the eviction process is carried out legally and smoothly, reducing the risk of disputes or legal action. This in turn means that you are able to get your property back on the market without any delays and maintaining your rental income.

Summary

An Assured Shorthold Tenancy (AST) provides several advantages for landlords. Legally, it provides a clear framework for the landlord-tenant relationship, outlining the rights and responsibilities of both parties. This can help to reduce the likelihood of disputes and ensure that the property is well-maintained. Additionally, an AST allows landlords to regain possession of their property at the end of the fixed term without having to provide a reason, as long as they follow the correct legal procedures. This can provide greater flexibility for landlords who may need to sell or move back into their property.

From a peace of mind perspective, an AST can provide landlords with a sense of security and stability. The tenancy agreement, inventory, and tenancy deposit all serve to protect the landlord’s interests and reduce the risk of financial loss. Furthermore, the clear legal framework and procedures for rent increases, repairs, and eviction is just as much of an advantage to the tenant as it provides fairness to both parties which helps ensure a happy relationship between all.

A word from us…

At Intra Capital Estates, we understand the complexities of the rental sector and are committed to supporting landlords in navigating these changes. Our team of experienced professionals is here to assist you with expert advice, tailored solutions, and comprehensive property management services.

If you have any questions or would like to learn more about ASTs, their implications, or our range of services, we invite you to get in touch. Our dedicated team is ready to address your inquiries and provide the assistance you need to thrive in the evolving rental landscape.

Stay informed, stay proactive, and let Intra Capital Estates be your trusted partner in the ever-changing world of property management.

Please note that the information provided in this blog post is intended for general guidance purposes only and should not be considered as legal advice. Visit gov.uk for more information.