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Residential tenancies – new penalties for landlords and agents

News and ViewsPublicationsResidential tenancies – new penalties for landlords and agents
Residential tenancies – new penalties for landlords and agents

Helen Fry

Solicitor

In early November 2016, the Home Office announced that various new offences for landlords created by the Immigration Act 2016 would come into force on 1 December 2016. The aim is to prevent anyone who is in the UK unlawfully from having access to the private rented sector (or, viewed another way, to force landlords to do part of the government’s job for it).

‘Right to rent’ – the 2014 regime

The ‘right to rent‘ regime was introduced by the Immigration Act 2014 as part of a broader government crackdown. In short, individuals do not have a ‘right to rent’ if they require leave to enter or remain in the UK but do not have it.

Despite criticism from landlord, tenant and immigrant groups, the scheme was rolled out nationally from 1 February 2016, requiring all UK landlords to check the immigration status of prospective tenants (and occupants) before entering into a tenancy agreement, with those falling foul of the new regime facing a civil penalty of up to £3,000.

The 2016 regime

Sections 39 to 41 of the Immigration Act 2016 amend the 2014 Act, seeking to tighten the net to a degree which many will find alarming.

The good news for landlords is that the 2016 Act makes it easier for landlords to evict tenants who are in the UK unlawfully, with evictions now able to proceed on the basis of a Home Office notice rather than a court order.

The (rather more substantial) bad news is that landlords and agents who fail to conduct right to rent checks or to take steps to remove unlawful migrant tenants could now face up to five years in prison, an unlimited fine, or both – not to mention possible sanctions under the Proceeds of Crime Act 2002 – in addition to the civil penalties already in place.

Landlords under residential tenancy agreements will commit a criminal offence if they:

  1. know or have reasonable cause to believe that a tenant or occupant of their premises is an adult without immigration permission; or
  2. fail to take steps to terminate a tenancy agreement when they know or have reasonable cause to believe that the tenant or occupant’s leave to remain in the UK has expired.

Where an initial document check reveals that a tenant has a time-limited right to remain in the UK, landlords must conduct further checks when the right to remain expires. If the tenant has a permanent right to remain, follow-up checks are only required upon receipt of a notice from the Home Office stating that the tenant’s immigration status has changed.

If the landlord is a company and commits an offence with the ‘consent or connivance‘ of an individual officer, both the company and the individual are liable.

Further, agents are liable if they know that an offence is being committed but fail to notify the landlord (though it is open to landlords and agents to agree in advance which of them will be responsible for ensuring compliance with the regime).

Advice for landlords

As should be apparent from the above, there will soon be nowhere to hide for those who facilitate unlawful tenancies. Landlords can avoid liability by doing the following:

  1. Conduct a thorough right to rent document check before authorising an adult to occupy rented accommodation;
  2. If a tenant or occupant’s right to remain in the UK is time-limited, diarise the date on which it is due to expire and conduct follow-up checks at that point;
  3. If the follow-up checks indicate that the tenant or occupant no longer has the right to remain, take steps to terminate the tenancy within a reasonable period (Home Office draft guidance states that a ‘reasonable period’ would be four weeks); and
  4. Make a report to the Home Office.

It is certainly possible that liability under the new regime could be stumbled into inadvertently. ‘Landlord’ is defined broadly and includes individuals who may not appreciate that they are caught by the regime’s requirements – for example, tenants who sub-let, and home-owners with lodgers. The requirement to conduct follow-up checks upon the expiry of a time-limited right to remain is particularly hazardous, not least because it applies equally to landlords who purchase a property with occupational tenants in situ.

Landlords should take some comfort from the fact that the new criminal sanctions are ostensibly aimed at catching the minority of ‘rogue’ landlords who deliberately flout the rules and/or ignore Home Office notifications, with the majority of breaches to be dealt with under the civil penalty regime. The way in which the rules will be applied in practice, however, remains to be seen; for now, vigilance is advised.

29 Nov 2016

Helen Fry