The Renters’ Rights Act 2025 brought an end to the so-called “AST trap” for leaseholders on 27 December 2025.
The AST trap previously gave freeholders the power to evict leaseholders who do not pay ground rent in certain circumstances using the rules in Section 8 of the Housing Act 1988 for non-payment of rent.
Before the Renters’ Rights Act came into force, certain long-term leases fell under the regime of assured shorthold tenancies. This gave the landlord the ability to obtain an order for possession under Ground 8 of Schedule 2 of the Housing Act 1988 where at least three months’ rent was more than three months in arrears where the rent was payable yearly.
In this blog post, I look at the circumstances where the AST trap applied, giving freeholders the right to evict leaseholders for non-payment of ground rent. I then explain how leaseholders have benefited from protection in the Renters’ Rights Act as it excludes long-term leases from the definition of assured tenancies.
>> Related Post: The latest news on the reform of ground rent
The end of the AST trap at a glance
- What was the “AST trap”?
- How Ground 8 allowed freeholders to evict leaseholders for ground rent non-payment
- Has the Renters’ Rights Act ended the AST trap?
- When did the abolition of the AST trap come into effect?
- What the end of the AST trap will mean for leaseholders
- The right to forfeit lease for ground rent non-payment
What was the “AST trap”?
The “AST trap” was a term used to describe the situation where long leases fell under the legal regime for assured shorthold tenancies (ASTs) until 27 December 2025, including the right for the landlord to evict a tenant for non-payment of ground rent using Ground 8 of Section 8 Housing Act 1988.
How could it be that laws intended to give landlords the right to evict tenants on tenancy agreements may apply to leaseholders of long-term leases?
There was no specific intention behind it. The AST trap arose because long leases were not originally specifically excluded from the Housing Act 1988. Consequently, any lease which started after 1996 would have been an assured shorthold tenancy if:
- the ground rent is more than £250 pa, or £1,000 pa in Greater London (see clause 3A Part 1 of Schedule 1 of Housing Act 1988),
- the leaseholder is an individual and not a company, and
- the property is the only or principal residence of at least one of the leaseholders.
The AST trap was a big issue for lenders as they not only would they have lost their security if a freeholder obtained possession for non-payment of the ground rent by the leaseholder, but the freeholder would not have needed to notify the leaseholder’s lender when seeking an order for possession if the property is an AST.
This now ended with the coming into force of Section 31 of the Renters’ Rights Act on 27 December 2025.
How Ground 8 allowed freeholders to evict leaseholders for ground rent non-payment
Landlords were able to obtain an order for possession under Section 8 of the Housing Act 1988 for leases using the mandatory Ground 8 in the following circumstances until 27 December 2025:
- The lease fell under the assured shorthold tenancy regime, where the annual ground rent was £250, or £1,000 in London (see above). This included those who hold shared ownership leases.
- The leaseholder was in arrears of ground rent both at the date of the service of a Section 8 Notice and at the date of the hearing.
- The rent arrears amount to at least three months’ rent which was more than three months in arrears,
- The lease stated it could be terminated using the relevant ground. The clause needed not necessarily refer to Ground 8, but could include a clause permitting forfeiture by re-entry on rent arrears. (This is a complex area. See this blog post from Nearly Legal: When a long lease is a shorthold).
Has the Renters’ Rights Act ended the AST trap?
Yes. Section 31 of the Renters’ Rights Act inserted a new paragraph 3D into Part 1 of Schedule 1 to Housing 1988 Act (tenancies which cannot be assured tenancies) that excludes: “A fixed term tenancy of a term certain of more than 21 years from the date of the grant of the tenancy”.
There is no restriction in paragraph 3D on whether the lease was pre-existing when the Renters’ Rights Act comes into force, or whether it is a new lease.
There is a separate paragraph 3E that relates to leases that were originally granted for fixed terms of between 7 to 21 years before the Renters’ Rights Act comes into force. This is in addition to paragraph 3D, and does not mean that only existing leases of 7 to 21 years are to be excluded from the definition of assured tenancy.
When did the abolition of the AST trap come into effect?
The exclusion of leases over 21 years from the definition of “assured tenancies” came into effect two months following Royal Assent of the Renters’ Rights Act.
As Royal Assent was on 27 October 2025, this came into effect two months later on 27 December 2025.
What the end of the AST trap will mean for leaseholders
The end of the AST trap makes being a leaseholder a little less precarious for those with ground rent over £250 pa (and £1,000 pa in Greater London), and makes life easier for those who are buying with a mortgage and leaseholders who are re-mortgaging.
Sellers of leasehold properties no longer need to obtain a deed of variation to their lease in which the freeholder confirms they will not use Section 8 to terminate the lease on the grounds of non-payment of ground rent.
Likewise, lenders should now stop asking for an indemnity insurance policy to be taken out against the risk that the landlord treats the lease as an assured shorthold tenancy, and brings the lease to an end (with the lender losing their security against the mortgage).
However, mortgage companies may still ask for any onerous ground rent clauses to be amended.
After the end of the AST trap, freeholders need to rely on their right of forfeiture, for so long as it lasts, for non-payment of ground rent.
The right to forfeit lease for ground rent non-payment
Freeholders can evict leaseholders for the non-payment of ground rent by using forfeiture.
Currently, if a leaseholder refuses to pay a small sum for more than three years that they have admitted is payable (or which the First-tier Tribunal (Property Chamber) or an arbitrator has made a final decision that the breach has occurred), the freeholder can forfeit the lease. There is no set-off, so the leaseholder would lose the entire value of the lease, even if it is worth significantly more than the money they owe to the freeholder.
The draft Commonhold and Leasehold Reform Bill contains provisions to abolish forfeiture, and will replace it with a “new lease enforcement scheme […]. Certain breaches are excluded from the scheme, , including ground rent arrears and other non-payment breaches below a specified threshold. The threshold will be set between £500 and £5,000, following consultation, and set out in regulations”.
>> Related Post: The latest news on the reform of ground rent
Any idea as to why the government amendment proposes a change from 7 to 21 years ?
I think it’s to make it harder for private landlords to use as a way round the Renters’ Rights Act. We’ll hear more about the reasons why on Tuesday
Hi Suzanne. Could I query how you know that the AST trap will be eliminated 2 months after royal assent? As I understand it, the content of the act will be implemented according to an as yet unpublished commencement plan that the government has said they’ll detail in the coming weeks. Does that only apply to some of the act?
Secondly, do you see there being a lag time after commencement (let’s say 27th December) and when lenders are actually willing to drop the ground rent AST trap as a risk and actually lend? It seems lenders are often very cautious and I’m concerned lenders will need some policy update after the act comes in, where the cogs might move incredibly slowly…
It’s true we are waiting for most of the implementation details, but Section 144(5) of the Act (using the HL Report stage version) says:
“The following come into force at the end of the period of two months beginning with the day on which this Act is passed—
(a) Chapter 2 of Part 1”
And the removal of the AST Trap is in Chapter 2 of Part 1.
I don’t know when lenders will change their policy, I’m afraid!
Oh, I didn’t catch that at all! That’s great news.
I guess we’ll find out RE lenders come 27th December then. Thanks.
It’s to make it harder for people to game the system. It was intended to deal with the AST trap for genuine leaseholders of long leases
Hi Suzanne,
Thank you for this very informative article. We are currently trying to sell our leasehold flat with a lease of 114 years remaining and a ground rent of £300, meaning some lenders will not lend as this is over the £250, thereby creating an AST. Do you have any idea when the renters’ right bill will come into effect and make this not applicable to leaseholders with a long lease? Many thanks in advance.
Hello. It’s likely to come into effect later this year (October maybe?), which is great news for people in your situation.
Hi Suzanne,
thanks for your article – it’s really helpful.
We are currently in the situation where we have our ground rent going over £1k in 39 years and therefore creating an AST and we are trying to sell our flat (115 years left on the lease).
I have shared your article with our solicitor, but they said that this will only apply to new leases. Is that your understanding too? If not, may I ask how could we show this to them?
Many thanks
Your solicitors are incorrect. All leases granted for over 21 years will not be assured tenancies when the Renters’ Rights Bill comes into force, not just new leases. Maybe they are getting confused with The Leasehold Reform (Ground Rent) Act 2022 which abolished ground rent for leases granted on or after 30 June 2022.
This is different. You can direct them to clause 33 (pg 48) in the latest draft of the Bill which includes “A fixed term tenancy of a term certain of more than 21 years from the date of the grant of the tenancy” in the list of tenancies that can’t be assured tenancies (and therefore subject to Section 8 orders for possession for non payment of rent) in Part 1 of Schedule 1 to the 1988 Act.
Here’s the link: https://bills.parliament.uk/publications/57759/documents/5623
Hope that helps.
Hi Suzanne, my solicitor was also of the view that Clause 33 only relates to new leases as the Explanatory Note to the Renters’ Rights Bill states:
‘Clause 33 amends Schedule 1 of the Housing Act 1988 to add fixed-term tenancies of more than 21 years to the list of tenancies that are excluded from the assured tenancy system. This will only apply to leases entered into after this clause has commenced.’
Page 44, line 254: https://bills.parliament.uk/publications/57760/documents/5660
I would be grateful for your views on this.
Thanks
The line underneath (255) deals with existing tenancies, to be inserted in a new section 3E of the Housing Act: “It also adds existing fixed-term tenancies that are more than seven years but 21 years or less to the list of excluded tenancies in Schedule 1. This will only apply to tenancies of this length
that were entered into before clause 33 has commenced or two months thereafter.”
But this website doesn’t give legal advice, so please don’t take my reading of the Bill as gospel.
I spent some time looking into this and also find this very confusing. I think because the explanatory notes in this document (https://bills.parliament.uk/publications/57760/documents/5660) are quite unclear:
254 Clause 33 amends Schedule 1 of the Housing Act 1988 to add fixed-term tenancies of more than 21 years to the list of tenancies that are excluded from the assured tenancy system. This will only apply to leases entered into after this clause has commenced.
However
260 This section excludes leases of more than 21 years or more from the assured tenancy system.This will allow leases over 21 years to have fixed terms, which are necessary for long leases to function. This will primarily affect shared ownership products and leasehold agreements with ground rents high enough to meet the legal threshold of an assured tenancy. It will mean landlords are no longer able to use the section 8 grounds to obtain possession of long leases which are also assured tenancies by virtue that they are not at low rent, including where a shared owner has built up arrears of rent.
The latest version of the bill does not seem to imply that this will only apply to new leases https://bills.parliament.uk/publications/61028/documents/6569
Very unclear. It would be great to get clarity on this as it seems very ambiguous while also affecting thousands of people who spent their hard earned income on leaseholds which are now unmortgageable and unsellable. The majority of leases affected are existing leases over 21 years.
Thank you – interesting article. And timely for us.
We are currently in the process of selling a long leasehold flat and the associated lease is missing the forfeiture clause. As expected, the buyer’s solicitor has raised this as a concern and the freeholder has demanded over £2500 to remedy this via a Deed of Variation. At our request our solicitor proposed an indemnity policy instead, issued by a mainstream insurer. The freeholder has rejected this.
The issue I am confused by is our solicitor informs us that the freeholder needs to approve the indemnity policy to confirm that “they are happy that the indemnity covers them should anything go wrong, and the lease needs to be forfeited”.
The reason for my confusion is that my understanding is there is no risk at all to the freeholder. If the ground rent is not paid then the lease is forfeited and the freeholder seizes the property. The risk is entirely on the buyer and their lender.
Assuming my understanding is correct, then I cannot see why the freeholder would need to be involved in this process. I’d be interested if you have a view here.
See the latest version of the bill here, from 15 July 2025: https://bills.parliament.uk/publications/62274/documents/6934
CHAPTER 2
TENANCIES THAT CANNOT BE ASSURED TENANCIES
31 Long tenancies and financial services products
(1) In Part 1 of Schedule 1 to the 1988 Act (tenancies which cannot be assured
tenancies), after paragraph 3C insert—
Fixed term tenancies of more than 21 years
3D A fixed term tenancy of a term certain of more than 21 years from
the date of the grant of the tenancy.
It states quite clearly that any tenancy over 21 years cannot be an AST. This is the bill itself, not the explanatory notes from over 7 months ago, which I assume are now outdated. This has no mention of only applying to tenancies granted after the act is passed.
It would make no sense for it to only relate to new leases, as new leases don’t have ground rent are therefore not AST’s (or very rarely AST’s).
Well spotted Sam. I also didn’t find anything saying it only applies to new tenancies.
Your article mentions forfeiture. Is that not a problem for lenders in the same way that the AST trap is? I’m wondering if lenders will just change their reason for rejecting mortgages from “the risk is the lease is too high and it could be deemed an AST and if you stop paying your rent we could lose our security”, to “the risk is the lease could be forfeited if you stop paying your rent and we could lose our security”. I’m assuming there’s some difference here, but your article mentions it so I’m wondering how it factors in? Thanks Suzanne!
Yes, forfeiture is another hurdle, but it’s quite complicated for a freeholder to claim. I talk about it in this blog post: https://theindependentlandlord.com/leasehold-commonhold/
The end of the AST trap is something that will make a difference to shared owners. They are currently considered tenants if they are in rent arrears and can lose their home with total loss of equity. If the arrears ground is proved, the Court must make an order for possession. It has no power to suspend or grant relief from the effects of the possession order. Once enforced, it will bring the tenancy/lease to an end. See Richardson v Midland Heart Ltd [2008].
It doesn’t make the news very often, but the AST trap has been used by registered providers to regain possession of shared ownership homes.
Hi Suzanne,
Reading this is very timely for me potentially.
If an application to court is made before Dec 27 2025 utilising this AST trap, would it continue to go through the court process do you know? Or would a leaseholder automatically be protected on account of the fact the Dec 27 date has passed, assuming a hearing has not taken place and been decided?
Thanks
Neil
I’m sorry but I can’t give this sort of advice
I’m sorry, I wasn’t asking for advice, I was assuming it was clearly defined somewhere and I had missed it…
Hi Suzanne
Please can you tell me if ground rent that is reviewed every 5 years has to be extended to 10 years in order to sell a flat and satisfy lenders.
Regards Stuart
I can’t give this sort of advice. Best ask your lender.
Hi Suzanne.
Re rent review 5 years extension to 10 years.
I’m not borrowing I’m selling and happy with the rent review staying at 5 years, but confused why it needs to change. Also please can you tell me if the law is addressing or changing this year regarding the above.
Regards Stuart.
Ground rent for existing long leases hasn’t yet been tackled. That’s due to be in the upcoming Leasehold and Commonhold Reform Bill.
From a freeholders point may i say if you pay your ground rent which is clearly defined and usually twice yearly for many years with a reminder notice,, no penalties or threats of repossession would be a problem
If that’s aimed at me, I am the freeholder and face 2 years of arrears on ground rent, insurance and service charges. All largely unenforceable due to the situation.
That is what I dont understand. Why would the leaseholder not pay the ground rent? Why do lenders make such a meal out of this now when it is that simple, just pay it?