Does the Renters’ Rights Act remove the £250/£1,000 ground‑rent “AST trap"?

 

Yes—for long residential leases, the Act removes the trap.

The Renters’ Rights Act 2025 amends the Housing Act 1988 so that fixed‑term leases of more than 21 years are no longer capable of being assured tenancies, regardless of the ground‑rent level. This ends the problem where a long lease could become an AST if ground rent exceeded £250 a year outside London or £1,000 in Greater London (triggering Ground 8 possession risk). Timing and transitional detail (important in conveyancing)

• New grants: The exclusion applies to leases granted after commencement of the clause.
• Existing leases (7–21 years): Leases over 7 but up to 21 years that were entered into before commencement (or within two months after) are also excluded from assured status. (This mops up the riskiest cohort that previously fell into the trap.) 
• The Bill received Royal Assent on 27 October 2025 and is now the Renters’ Rights Act 2025.  The specific fix for the “AST trap” (i.e., excluding fixed‑term long leases from assured tenancy status) is in the Act and does not depend on further secondary legislation. That clause is scheduled to commence automatically two months after Royal Assent—i.e., 27 December 2025.

What this means in practice

• Trap removed: A qualifying long lease won’t convert into an assured tenancy just because the ground rent is £250+/£1,000+; Ground 8 eviction risk no longer applies to those long leases.
• But ground rent isn’t “solved”: The Act doesn’t rewrite the rent figure or escalation terms. High or doubling rents can still depress value and mortgageability and may engage forfeiture risk if arrears accrue issues you still need to surface and manage on a transaction.
• Identify lease length and grant date. Confirm the term (21+ years) and whether the lease falls within the transitional 7–21‑year window so the exclusion definitely applies. Cite/refer to the commencement regulations in your report on title.
• Report on ground‑rent mechanics. Even with the trap removed, highlight amount, review formula (RPI/fixed/doubling), review frequency, and any mortgage‑lender red lines still in play.
• For sellers: Provide clear disclosure of ground‑rent history and arrears; consider whether a deed of variation (e.g., peppercorn/cap) would widen the buyer/lender pool.
• For buyers/lenders: Confirm the lease cannot be an assured tenancy under the new exclusion; then assess valuation and remortgage risk from the rent terms themselves, not from AST classification.
• Process points: Update your enquiries, precedent reports on title to reflect that long leases are excluded from assured status note especially the two‑month post‑commencement window for 7–21‑year leases.

Bottom line: The Act does remove the specific AST‑classification risk tied to ground rents above £250/£1,000 for long residential leases ( as from 27 December 2025) , but it doesn’t cure onerous ground‑rent economics. Keep advising clients on price, lender appetite, and (where needed) variations even though the “AST trap” itself is gone.

This article is provided for general information purposes only and does not constitute legal or professional advice. The content reflects the law and government guidance as at October 2025, including the Renters’ Rights Act 2025 which received Royal Assent on 27 October 2025. While care has been taken to ensure accuracy, readers should be aware that implementation dates and transitional provisions may change as commencement regulations are introduced.

You should not rely on this article as a substitute for specific legal advice on individual transactions or tenancy arrangements. Professional advice should be sought from a qualified property lawyer or conveyancer before taking or refraining from any action based on the information contained herein.

No liability is accepted for any loss or damage arising from reliance on this publication.

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