Government Proposals for Three Year Minimum Term Assured Shorthold Tenancy Agreements

As part of its plans to tackle the UK’s housing crisis the government has of late been concentrating on the private rental sector and is now focussing on the agreements most commonly used by that sector: the assured shorthold tenancy agreement (“AST”).

The government has recently launched a consultation on their proposals to implement a minimum term of 3 years to all ASTs. 

ASTs are often for terms of either 6 or 12 months, although there is technically no minimum term. The Government however is of the view that the system does not currently best serve landlords and tenants, hence the proposal.  The view is that the current system, where tenants have no security of tenure at the end of the term of the AST, is unfair on tenants; as they cannot comfortably or assuredly consider a property they rent under an AST to be their home.

The proposals possibly do not match up to the concerns of tenants who do not want a minimum term of more than 6 or 12 months: particularly student tenants and those only intending to rent for a reduced period of time. The Government’s proposals however would provide for a six month break clause in ASTs, allowing either party to end the tenancy after six months. In addition, and as is the case now, ASTs will be terminable by agreement between the parties or where the tenant breaches its obligations in the AST (eg. for non-payment of rent).

These new proposals appear to seek to grant tenants more security, but until the consultation is completed it is not clear what the wider response will be. Of significance will be the response from the council of mortgage lenders and individual lenders, many privately rented properties still being subject to a mortgage and / or forming part of a landlord’s portfolio of rental property.

We will publish a further update as the consultation and these proposals progress.