A Guide to Civil Penalties for Landlords

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Overview

Since 1 December 2014 private landlords in the West Midlands have been required to carry out 'right to rent checks'; with a £3,000 Civil Penalty payable if property is rented to 'illegal immigrants'. The Government has now announced that the pilot scheme was successful and the scheme will be applicable to all landlords in England from 1 February 2016.

Section 22 of the Immigration Act 2014 states that a landlord should not authorise an adult to occupy property as their 'only or main home' under a residential tenancy agreement unless the adult is British, an EEA or Swiss national, or has a “right to rent”. Section 20 of the Act defines a residential tenancy as one which 'grants a right of occupation for residential use' and 'provides for the payment of rent', whether at market value or not. It includes any licence or sub-lease, so a landlord may still be liable if the premises are sub-let to a person without the right to rent. 

Disqualified or with limited right to rent 

A person is 'disqualified 'from occupying a premises' if he or she does not have permission to be in the UK or is subject a condition preventing him or her from renting. However, there are concerns, not accepted by Government, that the requirement will lead to discrimination against people with 'foreign sounding' names or without 'local accents'. The Government has stated there is no evidence of this from pilot scheme. Nevertheless, it is concerning that the Government is turning landlords into immigration officers. There is little doubt that some landlords will 'play it safe' rather than risk a Civil Penalty. The scheme requires, in order to create an excuse, a document or combination of documents showing that the proposed tenant has the right to be in the UK, but as all employers will know, assessing immigration rights in the UK is not necessarily an easy task. For example, spouses and civil partners of EU nationals have the right to be in the UK, whether or not they have relevant documentation, and landlords could be exposing themselves to an Equalities Act claim if they refuse to rent to such a person, to name but one example. 

Penalties and defence

The level of penalty starts at £80 for a first breach where the person is a lodger and up to £3,000 where there is a rental agreement and there has been a previous breach.

Section 24 of the Act provides a statutory excuse where prescribed document checks were carried out before the tenancy was entered into or if responsibility was abdicated to an agent. The Government's guidance to the Act states that the excuse can be acquired by 'simple' document checks. However, for the reasons we describe in this document, it is not correct that the checks will be always be 'simple'. Checks can be made with the Home Office but the checking service is not always correct.

For tenants with limited leave in the UK, updated document checks will need to be carried out to maintain the statutory excuse.

A landlord can abdicate responsibility for checks to an agent and this will move liability of the penalty from the landlord to the agent, but only if the agent acts in the course of business and there is a written agreement between the landlord and the agent that the agent is under an obligation to carry out the relevant checks.

Excluded agreements 

The Scheme applies to private landlords only and accommodation involving local authorities, social housing where housing is provided on social need (therefore not 'market rate' agreements), care homes, hospitals and hospices,, hostels and refuges, tied accommodation, student accommodation (halls of residence and property leased by an educational provider – therefore not private landlords renting to students), and long leases (7+ years) are excluded.

For further information about Civil Penalties for Landlords or employers, or for any other immigration queries, please contact Allan Briddock, contact details below.

Blake Morgan offers a full immigration compliance audit service to ensure your business is fully compliant with all immigration law and procedures.