Do you have a long term assured shorthold tenancy?

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    Do you have a long term assured shorthold tenancy?

    This has been floating around for a while, but many people don't seem to be aware. If the ground rent on a lease is over £250 pa (outside London) or £1000 pa (in London), then the lease is an assured shorthold tenancy if the leaseholder lives there. This has consequences, including the mandatory ground for possession for rent arrears (ground 8 Schedule 2 Housing Act 1988) and for the 'right of first refusal. More details here:
    While on leasehold issues, this has been floating around for a bit, but I don’t think it has had the attention and awareness it deserves (perhaps particularly from conveyancers). With all the fuss/scandal around leasehold houses and multiplying ground rent clauses, a more general issue with long leases and ground rent has been overlooked. The …

    Leasehold flats are sold by developers under long lease over 99 years or 125 years and the property title is registered in the name of the leaseholder. The Lease is entered between the Lessor ( Freeholder /Landlord /Developer ) and the Lessee ( first buyer of the leasehold flat ).

    Most new leasehold flats are sold with lease requiring annual ground rent payment and its quite common to see the ground rent priced at £350 p.a for 1 bed unit and £500 p.a for 2 bed unit.

    The Long Lease is covered by the L&T Act 1985 and subsequent Housing Laws but this lease has never been called an AST agreement.

    The AST agreement is a rental agreement between the Landlord ( REGISTERED Freeholder/Leaseholder ) and Tenant ( occupant paying weekly /monthly rent ). This occupancy agreement is not related to the property title. which is kept at the Land Registry.


      A long lease with a ground rent is a rental agreement between a landlord (freeholder, or intermediate long leaseholder) and a tenant (person with legal possession, paying a rent. If the tenant also lives there, they are an occupier.

      As far as I know AST rents can be yearly, and long lease ground rents could be monthly.

      If long leases are taken out of the AST regime, it will be because they are long, but I'm not sure that there is any such condition in the legislation.


        Gordon999 - It doesn't matter what it is called. Whether it is an assured shorthold tenancy or not is a question of the operation of statute. Neither the length of term nor whether rent is monthly or annual make any difference. If a lease meets the conditions set out in the linked post, it is an AST, which means all the usual provisions on forfeiture and on 'right of first refusal' don't apply.

        Leaseholder64 - there is no such condition in the legislation. It is perfectly possible to have a 999 year assured shorthold tenancy


          Does the £250 pa / £1000 pa threshold only apply to ground rent? What about other things that may be 'reserved as rent', in a lease, such as service charges?

          For example if the ground rent is only £100 pa but the service charge is reserved as rent and is another £1000 pa and the leaseholder fails to pay, is the leaseholder at risk of possession under the mandatory ground for possession for rent arrears (ground 8 Schedule 2 Housing Act 1988)?


            This is a good question. Meaning I don't know the answer (and neither does anyone else). I suspect that a variable service charge would not count, even if expressed as rent, because it would potentially leave the status fluctuating depending on the level of service charge for that year. Also, service charge does not have to be demanded in the same way as rent, even if reserved as rent.


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