The Renters' Rights Act 2025: Ending the AST trap

Among these changes is an end of the 'AST trap', a lesser reported-on technical issue that has affected increasing numbers of leasehold property owners in the past few years.

The 'AST trap' refers to the situation in which a long lease is classified as an Assured Shorthold Tenancy (AST), and therefore subject to the mechanisms under which a landlord can terminate an AST, specifically for non-payment of rent.

While it may seem counter-intuitive to suggest that long leaseholds can be classified as ASTs, that has been the case due to a technicality introduced by the Housing Act 1988.

Under section 8 of the Housing Act 1988, a landlord may obtain an order for possession of a property under various 'grounds'. Ground 8 specifically allows a landlord to repossess a property if the tenant is in at least three months' rental arrears and the lease is an AST. An AST, for these purposes, is one in which the ground rent is more than £250 per annum, or £1,000 per annum within Greater London.

Consequently, a long lease which reserved a ground rent in excess of these sums was technically an AST under the Housing Act 1988. Therefore, a landlord could seek a possession order of a long leasehold property where the tenant had not paid their ground rent.

Ground 8 is a mandatory ground, meaning that if the criteria for an order have otherwise been satisfied, a judge must make an order for possession. A tenant could not therefore dispute this, and neither was there any requirement for a landlord to notify or consult with a lender who might have had a charge over the affected property.

Although largely theoretical, the strict interpretation of this technicality made lenders and banks nervous as they did not want to lose their security over a long leasehold property if the owner was evicted for non-payment of the ground rent. Increasing numbers of leasehold properties began falling into the AST trap too due to escalating ground rents under their leases.

As a result, lenders increasingly requested that leases be amended to prevent landlords from enforcing these provisions and evicting the leaseholder. In practice, this would often mean that a seller of a long leasehold property would have to request an amendment to their lease from their landlord before a buyer's lender would proceed with the sale. This would require the consent of the landlord, with the amendments typically documented in a Deed of Variation between the landlord and seller.

Compounded often by a general misunderstanding between buyers and seller as to why a lease needed to be amended, this would inevitably lead to unnecessary delays and frustration during the conveyancing process.

As of 27 December 2025 however, buyers and sellers should no longer be concerned. The Renters Rights Act 2025 inserts a single sentence into the Housing Act 1988 to confirm that a fixed term tenancy of a term of more than 21 years from the date of the grant of the tenancy is not an Assured Tenancy.

This amendment should therefore eliminate the need for buyers or their lenders to request a Deed of Variation to address the 'AST trap', simplifying the conveyancing process and providing relief to many practitioners.

If you have any questions regarding the issues discussed in this article, or the amendments introduced by the Renters' Rights Act 2025 more widely, please get in touch with Rory Young in our Real Estate team.