If the annual rent is more than £25,000 pa, then it cannot be an assured shorthold. But, that figure increases to £100,000 as from 1 October [2010]. Whilst this change is not retrospective, it will affect all tenancies already in place on 1 October. Thus, a tenancy started before 1 October for rent of more than £25,000 pa, but less than £100,000 pa, will automatically convert to an assured shorthold on 1 October. But, commentators have highlighted a number of potential problems:

tenancy deposit: tenancies that convert to assured shortholds on 1 October will have had deposits taken on them prior to that date. Those deposits will not have been protected under a tenancy deposit scheme within 14 days of receipt. It is arguable that the deposits will not need to be protected, since they were taken at a point when protection was not required (and it is usually the act of taking the deposit that is seen as the trigger for protection). But, on renewal, the money will then presumably need to be protected. But, it is worth noting that the government has announced its view as being that existing tenancies that become assured shortholds will have to protect rent deposits as of 1 October. Thus, Ls of existing tenancies that become assured shortholds on 1 October should consider protecting any rent deposits before 1 October. However, most commentators take the view that the government’s interpretation of the law is simply wrong;

forfeiture: if forfeiture proceedings are started for breach prior to 1 October then there is a potential argument that the proceedings will be ineffective since an s8 notice has not been served. That argument is probably wrong, because it is the issue of forfeiture proceedings that brings the tenancy to an end (and so the tenancy is at an end by the date of the hearing);

s21 notice: for tenancies that end shortly after 1 October there will not be sufficient time to serve an s21 notice giving two months’ notice to T that L requires the return of the property. Whilst such a notice could be served before 1 October, it might then be argued that it is not effective at that point because the change has not occurred. But, since there is no prescribed form for an s21 notice that point may be irrelevant (ie there is nothing to stop L from giving notice in any type of tenancy that he requires possession back, and if such a notice satisfies the requirements of s21, it would presumably be effective for that purpose too);

old tenancies: before 28 February 1997, a tenancy could only be a shorthold if it was for a fixed term of at least six months, and L gave T a notice in a prescribed form. However, all assured tenancies granted after that date are automatically assured shortholds. But, tenancies granted before 28 February 1997 may be converted into assured tenancies in October, but cannot be assured shortholds – because the prescribed notice will not have been given prior to the grant of the original tenancy. Thus, one assumes that Ts under those tenancies will therefore acquire full security of tenure (as opposed the limited security of tenure for tenancies granted after that date, which become assured shortholds).

As things stand, it all sounds like a recipe for chaos! Note that this only applies to England (the Welsh Assembly will shortly make its own decision on this). Source: http://nearlylegal.co.uk and http://blog.painsmith.co.uk.