Assured Shorthold Tenancy (AST) – Definition, Overview & FAQ
What is an assured shorthold tenancy (AST)?
Definition: An Assured Shorthold Tenancy (AST) is the most common type of tenancy agreement used in private residential rentals in England and Wales.
It is a legal contract between a landlord and tenant, which grants the tenant the right to occupy a property in exchange for rent.
Key elements of an AST are:
- Duration: ASTs are typically set for a fixed term, often six months or a year, but can be for any period agreed upon by the landlord and tenant. After the fixed term, unless renewed, they can roll into a periodic tenancy, usually running month-to-month.
- Tenant Rights: Tenants have a right to quiet enjoyment of the property without unwarranted disturbance from the landlord. They also have legal protection against unfair eviction and rent increases.
- Landlord Rights: Landlords can regain possession of the property after the fixed term ends, provided they give the tenant proper notice. They can also evict tenants under certain conditions, like rent arrears or property damage, following a legal process.
- Rent and Deposit: The agreement determines the rent amount and due dates. Deposits taken under ASTs must be protected in a government-approved Tenancy Deposit Scheme.
- Notice Periods: Landlords must provide tenants with a notice period before ending the tenancy, typically two months, as specified in the Housing Act 1988.
- Standard Terms: AST agreements often include terms about the use of the property, responsibility for repairs, subletting rules, and other conditions.
- Section 21 Notices: Landlords can issue a Section 21 notice for no-fault eviction after the fixed term of an AST, subject to legal requirements and procedures.
- Exclusions: Certain types of property and tenancy arrangements, like holiday lets or tenancies with an annual rent of over £100,000, do not qualify as ASTs.
ASTs provide a balance of protection and flexibility for both landlords and tenants and are a cornerstone of the private rental sector in England and Wales. They are governed by the Housing Act 1988, as amended by the Housing Act 1996.
Establishing an assured shorthold tenancy
Establishing an Assured Shorthold Tenancy (AST) involves a series of steps and considerations to ensure the agreement is legally compliant and clear to both the landlord and tenant. Here’s a guide to the process:
- Eligibility Check: Ensure the tenancy can qualify as an AST. The property must be private residential accommodation, and the landlord and tenant must be individuals. The annual rent should not exceed a certain threshold (as per local regulations), and the landlord must not live in the property.
- Drafting the Tenancy Agreement: Create a written tenancy agreement, which is the key document outlining the terms of the AST. This agreement should include details such as the duration of the tenancy, rent amount and payment schedule, deposit amount, tenant and landlord obligations, and any other conditions relevant to the tenancy.
- Setting the Tenancy Term: Decide on the length of the AST. Most ASTs start with a fixed term, commonly six or twelve months, but the term can be set to any duration agreed upon by both parties.
- Security Deposit Collection and Protection: If taking a deposit, collect an amount in line with legal limits and protect it in a government-approved Tenancy Deposit Scheme within 30 days of receipt. Provide the tenant with the prescribed information about where the deposit is held and how it is protected.
- Right to Rent Check: In England, conduct a ‘Right to Rent’ check to ensure the tenant has legal immigration status to rent property in the UK.
- Property Safety Compliance: Ensure the property meets all safety standards, including having working smoke alarms and, if applicable, gas safety certificates.
- Providing Essential Documents: Supply the tenant with required documentation, such as an Energy Performance Certificate (EPC), a current gas safety certificate (if gas appliances are present), and a copy of the government’s ‘How to Rent’ guide.
- Communication and Records: Maintain clear communication with the tenant and keep records of all documents and correspondence related to the tenancy.
Common clauses in an AST
Common clauses found in an AST include:
- Parties to the Agreement: Identification of the landlord and tenant(s).
- Property Details: A full description of the rental property, including address and specifics of the rented space.
- Term of Tenancy: The duration of the tenancy, specifying start and end dates. This can be a fixed term or a provision for it to become a periodic tenancy.
- Rent Details: Amount of rent, payment intervals (e.g., monthly), due dates, and methods of payment. Clauses may also cover rent review mechanisms and procedures for rent increases.
- Deposit: Details about the security deposit, including the amount, protection scheme details, and conditions under which it can be withheld.
- Tenant Obligations: Responsibilities of the tenant, such as paying rent on time, not engaging in illegal activities, and maintaining the property’s cleanliness and condition.
- Landlord Obligations: The landlord’s responsibilities, including property repairs, maintenance, and ensuring safety standards are met (e.g., gas safety, electrical safety, fire safety).
- Subletting and Assignment: Rules regarding the tenant’s ability to sublet the property or assign the tenancy to another person.
- Right of Entry: Conditions under which the landlord can access the property, typically requiring advance notice and for specific purposes like inspections or repairs.
- End of Tenancy: Instructions for ending the tenancy, including notice periods and requirements for returning the property in good condition.
- Break Clause: If included, this allows either party to terminate the tenancy early, subject to certain conditions and notice periods.
- Pet Policy: Stipulations regarding keeping pets in the property.
- Smoking Policy: Rules regarding smoking within the property.
- Alterations to the Property: Restrictions or permissions regarding making alterations or improvements to the property.
- Dispute Resolution: Procedures for addressing disputes that may arise during the tenancy.
It’s essential for both landlords and tenants to thoroughly read and understand all clauses in an AST. These clauses should be clear, fair, and comply with current housing laws.
Illegal clauses in an AST
In an Assured Shorthold Tenancy (AST) agreement, certain clauses can be deemed illegal or unenforceable if they contravene UK housing laws or undermine the rights of the tenant. It’s important for both landlords and tenants to recognize and avoid these clauses. Some examples of illegal clauses in an AST include:
- Waiver of Legal Rights: Any clause that attempts to waive the tenant’s legal rights, such as the right to live in a property that meets health and safety standards or the right to protect their deposit in a Tenancy Deposit Scheme.
- Excessive Financial Penalties: Clauses that impose unreasonable charges or penalties, for instance, excessive fees for late rent payments that are disproportionate to the cost incurred by the landlord.
- Unfair Eviction Terms: A clause that allows the landlord to evict the tenant without proper legal process or sufficient notice, bypassing the tenant’s right to due process.
- Access Without Notice: Stipulating that the landlord can enter the property without giving reasonable notice or only under specific circumstances (such as for urgent repairs) is illegal.
- Unlawful Discrimination: Any clause that discriminates against the tenant based on race, religion, gender, disability, sexual orientation, or other protected characteristics under the Equality Act 2010.
- Restrictions on Reporting Repairs or Issues: Clauses that penalize tenants for reporting necessary repairs or safety issues to local authorities.
- Full Repairing Responsibility: Expecting the tenant to take full responsibility for all repairs and maintenance, including structural and statutory responsibilities which are legally the landlord’s obligation.
- Automatic Rent Deductions: Clauses that allow the landlord to automatically deduct money from the tenant’s wages or bank account for rent or repairs.
- Unfair Break Clauses: Break clauses that are heavily biased towards the landlord, allowing them unilateral rights to terminate the tenancy while denying the same to the tenant.
- Unreasonable Property Alteration Restrictions: While landlords can impose reasonable restrictions on property alterations, outright banning all forms of alterations, even minor ones like hanging pictures, can be considered unfair.
Tenant rights under AST
Under an Assured Shorthold Tenancy (AST), tenants in the UK are granted specific rights to ensure their protection and fair treatment throughout the duration of their tenancy. These rights are crucial for tenants to understand and exercise. Key tenant rights under an AST include:
- Right to Live in a Safe and Habitable Property: Tenants have the right to a property that is safe and in a good state of repair. This includes meeting health and safety standards for gas, electricity, fire safety, and overall structural stability.
- Deposit Protection: If a deposit is taken, it must be protected in a government-approved tenancy deposit scheme. Tenants have the right to receive prescribed information about where their deposit is held and how it is protected.
- Privacy and Quiet Enjoyment: Tenants have the right to live in the property undisturbed. Landlords must provide notice (usually 24 hours) before entering the property, except in emergencies.
- Fair Eviction Process: Landlords must follow proper legal procedures and notice periods if they wish to end the tenancy. This includes serving a valid Section 21 or Section 8 notice, depending on the circumstances.
- Challenging Excessively High Charges: Tenants have the right to challenge excessively high charges, including rent increases, to ensure they are fair and justified.
- Repairs and Maintenance: Tenants have the right to have repairs carried out in a timely and effective manner. Major responsibilities for repairs fall to the landlord.
- Protection from Unfair Terms and Eviction: Any unfair terms in an AST are not legally binding. Tenants are also protected from unfair eviction and retaliatory eviction if they have raised legitimate complaints about the property’s condition.
- Right to Information: Landlords are required to provide tenants with certain information, including an Energy Performance Certificate (EPC), gas safety certificate (if applicable), and the government’s ‘How to Rent’ guide.
- Council Tax and Utility Bills: Unless stated otherwise in the agreement, tenants are responsible for paying council tax and utility bills. The agreement should clearly outline who is responsible for these payments.
- Ending the Tenancy: Tenants have the right to end the tenancy as per the terms in the AST, typically by providing notice in line with the agreement or after the fixed term ends.
Landlord rights under AST
Under an Assured Shorthold Tenancy (AST) in the UK, landlords have specific rights that enable them to manage their property effectively while ensuring the tenancy is conducted in a legal and orderly manner. Key landlord rights under an AST include:
- Right to Receive Rent: Landlords have the right to receive the agreed rent from the tenant at the times specified in the tenancy agreement. They can take legal action if the rent is not paid.
- Property Repossession: At the end of the agreed tenancy period, landlords have the right to repossess their property, provided they give the tenant the correct notice. This is typically executed through a Section 21 notice (no fault eviction) or a Section 8 notice (if the tenant has breached the tenancy terms).
- Right to Evict for Breach of Tenancy: If tenants violate terms of the AST, such as causing significant damage to the property or engaging in illegal activities, landlords have the right to evict them following proper legal procedures.
- Entry for Inspections and Repairs: Landlords have the right to enter the property for inspections, repairs, and maintenance, but they must provide reasonable notice to the tenant (usually 24 hours) and conduct visits at a reasonable time of day, except in emergencies.
- Deposits Deductions: If a tenant causes damage to the property (beyond fair wear and tear), fails to pay rent, or breaches the tenancy agreement, the landlord has the right to make appropriate deductions from the deposit at the end of the tenancy.
- Setting and Increasing Rent: Landlords have the right to set the rent amount and increase it, subject to any restrictions or processes outlined in the tenancy agreement and local laws.
- Implementing House Rules: Landlords can set reasonable rules regarding the use of the property, including restrictions on subletting, pet ownership, or alterations to the property, provided these rules comply with the law and are agreed upon in the tenancy agreement.
- Terminating the Tenancy: Landlords can terminate the tenancy at the end of the fixed term or during a periodic tenancy, provided they follow the correct legal procedures and notice periods.
- Challenge Property Damage Claims: If a property is damaged, landlords can challenge claims and present evidence, especially during disputes over deposit deductions.
- Update Tenancy Agreement: Upon renewal of the tenancy, landlords have the right to update the terms of the tenancy agreement, subject to agreement with the tenant and adherence to legal requirements.
Common misconceptions and clarifications regarding assured shorthold tenancy
- Misconception: Landlords can evict tenants anytime during an AST.
Clarification: Landlords must follow legal procedures for eviction, including providing proper notice (usually via a Section 21 or Section 8 notice) and cannot evict tenants during the fixed term without a valid reason.
- Misconception: Tenants can leave an AST anytime without notice.
Clarification: Tenants are bound to the terms of the AST and usually must provide notice if they wish to leave the property before the end of the fixed term, as specified in the tenancy agreement.
- Misconception: The deposit can be used as the last month’s rent.
Clarification: The security deposit is not intended to cover the last month’s rent. It is primarily for covering damages or unpaid rent after the tenant vacates the property.
- Misconception: ASTs are only for short-term rentals.
Clarification: Despite the name, ASTs can be for any rental duration and often start with a fixed term of six or twelve months but can be longer.
- Misconception: Landlords can increase rent anytime.
Clarification: Rent increases must be done in accordance with the terms of the AST and require proper notice. In periodic tenancies, landlords typically need to provide at least one month’s notice.
- Misconception: The landlord has the right to enter the property anytime.
Clarification: Landlords must provide reasonable notice, usually 24 hours, before entering the property, except in emergencies.
- Misconception: AST agreements don’t need to be in writing.
Clarification: While a verbal agreement can be legally binding, having a written AST is crucial for clarity and evidence of the terms agreed upon by both parties.
- Misconception: All residential tenancies are ASTs.
Clarification: Certain tenancies, like those with high rent, company lets, or where the landlord resides in the same property, do not qualify as ASTs.
- Misconception: Normal wear and tear can be deducted from the deposit.
Clarification: Landlords cannot deduct costs for normal wear and tear from the deposit. Charges can only be made for damages beyond normal use.
- Misconception: Landlords can withhold the deposit for any reason.
Clarification: Deductions from the deposit must be justified, such as for property damage or cleaning costs, and should be clearly documented.
Is an AST the same as a lease?
An Assured Shorthold Tenancy (AST) is a type of lease, but it’s specific to private residential properties in the UK and comes with particular legal provisions under the Housing Act 1988. While all ASTs are leases, not all leases are ASTs. A lease is a broader term that can apply to various rental agreements, including commercial properties and longer-term residential leases, which might not fall under the AST category.
What is the difference between AST and non AST?
The main difference between an AST and a non-AST lies in the level of tenant protection and the grounds for eviction. ASTs provide specific protections to tenants, like deposit protection and eviction restrictions. Non-ASTs, which might include high-rent properties, company lets, or cases where the landlord lives in the same property, are not subject to the same rules and may offer less tenant protection. For instance, non-AST tenancies often allow for more flexible eviction terms for the landlord.
What type of contract is an AST?
An AST is a legally binding contract or agreement between a landlord and tenant for the rental of a residential property. It’s governed by specific conditions outlined in the Housing Act 1988 and is the most common type of tenancy agreement used in the private rental sector in England and Wales. The AST sets out the terms and conditions of the tenancy, including rent, deposit, duration, tenant and landlord obligations, and notice periods.
Can an AST be ended early by the tenant?
A tenant can only end an AST early if there’s a break clause in the agreement or if the landlord agrees to the early termination. Without a break clause, tenants are typically responsible for rent until the end of the fixed term or until a new tenant is found.
Is a guarantor required for an AST?
Whether a guarantor is required for an AST depends on the landlord’s requirements. Landlords might ask for a guarantor if the tenant has a poor credit history, is a student, or does not meet certain income requirements.