The Renters’ Rights Act 2025: The end of the AST Trap
The Ground Rent Trap, or AST Trap, created by the poor drafting contained in the Housing Act 1988, will finally fall away on 27 December 2025, being the date two months after the Renters’ Rights Act 2025 (RRA) received Royal Assent.
The issue is that ground rents which exceed £1,000 per annum in London (£250 outside of London) can result in long leases being considered assured shorthold tenancies (ASTs) under the Housing Act 1988. As a result, they are subject to the ability for the landlord to evict the tenant for non-payment of rent using Ground 8 of the Housing Act 1988. Ground 8 is a mandatory ground for repossession by the Landlord and applies where ground rent is unpaid for over three months. As it is a mandatory ground, a judge does not have the ability to refuse to make an order.
Although these provisions affect relevant leases granted after 15 January 1989, the government only consulted on this issue in 2017, when this was highlighted alongside concerns about escalating ground rents in long leases. For long leaseholders the issue is potentially dangerous, but as long as they pay their ground rent, it should not cause an issue. However, for lenders this is a serious concern where there is no provision in the long lease for them to be notified. In such cases, by the time the lender becomes aware of the breach the lease could be forfeited and the asset the mortgage is secured against lost.
In practice, this has primarily been a technical point but it has been a headache for practitioners all the same and delayed transactions for buyers and sellers.
Whilst this (slightly late) Christmas gift for conveyancers and long leaseholders will be happily received, the wider implications of the RRA are of significant concern for many landlords. Whilst the Renters’ Rights Act 2025 is now law, having received Royal Assent on 27 October 2025, there will be a staged implementation. The first phase of changes to be introduced from 1 May 2026 include:
- The abolition of ASTs to be replaced with Assured Periodic Tenancies;
- An information sheet (to be produced by the government) must be provided to tenants by no later than 28 May 2026;
- A written tenancy must be given to the tenant before the tenancy is entered into;
- Rents can only be increased after serving a section 13 notice and this can only be done once annually;
- No further section 21 notices can be served, ending “no fault” evictions;
- New tenancies cannot require rent to be paid before the tenancy is signed and no more than a month’s rent at a time can be demanded;
- Adverts must list the rental price and offers above the listed rent cannot be accepted;
- Rules preventing discrimination against those with children or those on receipt of benefits will be introduced.
Other measures will be introduced in a phased approach the current timeline for which extends to 2028 when it is expected to become mandatory to sign up to the PRS Landlord Ombudsman.
For more on implementation, please see our Quick Read: Renters’ Rights Act 2025: What is the Government’s roadmap for implementation?
Thankfully for the prime and super prime letting markets, the changes only apply to those tenancies that were, or would previously have been, assured shorthold tenancies (ASTs). That means that in London anything with a rent over £100,000 per annum or under £1,000 per annum will not be impacted. Not only does this allow the exclusion of prime and super prime rentals, who will be able to continue to let under common law tenancy agreements, it also means that tenancies at nominal rents (below £1,000 per annum in London and £250 outside of London) are excluded. As a result, trustees letting to beneficiaries, for example, will not have to battle with the new legislation, which will be a relief for trustees.
