Rob Denman, Head of JB Leitch Real Estate, looks at the impact implications of a key element of the recently introduced Renters’ Rights Act 2025:
Among the wide‑ranging reforms introduced by the Renters’ Rights Act 2025, one of the most quietly transformative changes is the clarification around long residential leases and their status under the Housing Act 1988. Although not as high‑profile as the end of Section 21 notices, this particular change finally resolves an anomaly that has caused years of unnecessary worry and administrative work across the leasehold sector.
What Was the AST Trap?
For many years, the wording of the Housing Act 1988 created an unusual and unintended position: a long residential lease, sometimes lasting 99 or 125 years, could theoretically be treated as an assured tenancy if the leaseholder lived in the property and paid ground rent above certain thresholds. Under that interpretation, a landlord could attempt to use mandatory rent arrears provisions designed for short‑term tenancies to gain possession, bypassing the normal protections that long leaseholders rely on.
Although this was never realistically pursued in practice, the theoretical risk meant lenders, conveyancers and managing agents could not ignore it. As a result, many long leases were altered through deeds of variation or supplemented by indemnity insurance to eliminate the possibility of possession being sought under the Housing Act 1988.
What the Act Changes
The Renters’ Rights Act brings welcome clarity. From 27 December 2025, any fixed‑term residential lease of more than 21 years is no longer capable of being treated as an assured tenancy. This closes the loophole once and for all and ensures long leases cannot be caught by possession procedures designed for short‑term lettings.
This aligns the law with long‑established practical reality: long leaseholders are not short‑term tenants, and they should not be exposed to the same statutory possession regime.
What This Means for Freeholders and Managing Agents
For freeholders and managing agents, this change delivers a very practical and immediate benefit.
Until now, to mitigate the risk of a landlord theoretically using Housing Act 1988 grounds to obtain possession for rent arrears, many leases required a deed of variation to remove that possibility entirely. Alternatively, lenders often insisted on a lender notice clause so they would be alerted if such action were ever contemplated.
Because long leases granted for more than 21 years are no longer treated as assured tenancies, these measures are no longer necessary. This means:
- Deeds of variation are no longer needed to prevent the use of Housing Act rent‑arrears possession procedures on long leases.
- Lender notice clauses are no longer required, as lenders no longer face the risk of losing security through mandatory possession under those provisions.
- Conveyancing can proceed more smoothly without delays linked to modifying lease terms.
- Freeholders and managing agents can administer long‑lease properties with less risk, less complication and less administrative burden
A Small Change with a Tangible Impact
This reform may seem technical, but it removes a long‑standing anomaly that has complicated leasehold work for years. With the AST trap finally closed from 27 December 2025, long leases now sit on a clearer and more stable legal foundation, benefiting leaseholders, lenders, freeholders and managing agents alike.
