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What is the assured tenancy trap?
Under the Housing Act 1988, some long residential leases (even 99 or 125 year leases) fell within the assured tenancy regime if certain statutory conditions were met. In broad terms, this could apply where:
- the tenant is an individual occupying the property as their only or principal home; and
- the annual ground rent exceeds £250 (or £1,000 in Greater London);
and so long as other statutory exclusions do not apply.
If a long lease fell within that regime, the landlord could seek possession using the mandatory possession ground for rent arrears (Ground 8). This applies if at least three months’ rent is more than three months in arrears (usually ground rent is payable yearly or twice yearly but different criteria will apply if not) at the date the notice is served and at the hearing — even though the leaseholder owns a long lease and may have significant equity in the property. Further, the usual common law right to apply to the court for relief from forfeiture would, in the case of possession being sought under Ground 8, not be available to the leaseholder.
Unsurprisingly, buyers and mortgage lenders saw this as a significant risk, which led to sales falling through, lenders declining to lend, and, assuming their landlords are amenable to varying their leases, sellers having to fund deeds of variation to reduce or cap ground rent to ensure their leases are no longer caught.
What has changed?
Since 27 December 2025, new legislation in the shape of the Renters’ Rights Act 2025 has disapplied the assured tenancy regime to long residential leases, so that residential long leaseholders cannot be treated as assured tenants merely because the ground rent exceeds the £250/£1,000 threshold. This means that:
- long leases will no longer be assured tenancies for any purposes
- freeholders will not be able to rely on Housing Act 1988 assured tenancy possession grounds (such as Ground 8) for ground rent arrears under long residential leases;
and the “AST trap” will effectively disappear.
What does this mean for buyers and sellers?
For buyers, sellers, and lenders, this removes one of the biggest technical risks in modern leasehold conveyancing. In many cases, deeds of variation which were previously sought purely to address the AST trap should no longer be required.
That said, the removal of the AST trap does not resolve all ground rent or lease complexities. Ground rent escalation, lender handbook requirements, consumer protection considerations, service charge provisions, and other lease terms will continue to be relevant to value, mortgageability, and marketability. Note also that many new long residential leases reserve a peppercorn ground rent and were never affected by the AST trap.
If you are thinking about selling or buying leasehold property and have any questions, please feel free to speak with one of our real estate lawyers to discuss your options. You can send us an email or call +44(0)3333 231580.
