AST CHANGE MEANS ALL DEPOSITS UNDER £100K MUST BE REGISTERED
14 May 2010
As many readers will be aware, the rental value of the property determines what type of tenancy agreement needs to be used for any given dwelling. For many years now, properties with annual rent under £25k have required the use of an Assured Shorthold Tenancy (AST) agreement while those with rental values in excess of this amount required a Contractual Tenancy.

With the introduction of the Tenancy Deposit Scheme in 2004, this threshold became particularly important as the Housing Act stipulated that all deposits held under an AST must be registered with an approved government scheme. For our landlords, this threshold of approximately £480 per week meant that just over half of all deposits had to be registered with an approved scheme. This threshold is now set to increase on 1 October to £100k (roughly £1920 per week), meaning that nearly all deposits will now have to be registered.

The bad news is that there is an annual fee (currently £45 + VAT) for registering the deposit. But the good news is that we have a very organised in-house paralegal team who will shortly begin the process of registering these deposits and issuing addendums for all deposits held in our client account, with copies of the executed paperwork being sent out shortly afterwards.

It absolutely essential that the minority of landlords who currently hold their own deposits make arrangements to avoid being caught out by the change in the rules. This will mean either registering the deposit with a third party scheme or transferring it to us so that we can register it with our nominated scheme. Doing nothing is not an appealing option - the fine for non-compliance is three times the value of the deposit held.

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