Andrew Ford offers a reassuring guide for landlords on their responsibilities under the new legislation, and the ways to steer clear of its increased penalties for non-compliance
The Immigration Act 2016 gained Royal Assent in May and introduced a number of changes which are set to affect the private rental sector (PRS).
Private landlords have been specifically targeted within the legislation, and a new range of penalties has been introduced to curb the renting of properties to tenants who do not possess the correct immigration permissions.
Higher penalties
Under the Immigration Act 2014, landlords were already required to check the residency status of their tenants, ensuring that they had the right to live and work in the United Kingdom.
The updated 2016 legislation still requires landlords to make appropriate checks, but has drastically reworked the range of penalties which can be given if property owners are found to be renting to illegal tenants.
Previously, the maximum civil penalty for landlords was £3,000; however this can now rise to an unlimited amount, with the possibility of a custodial sentence, as the severity of the case increases. Although the threat of jail time seems unlikely for minor breaches of the legislation, it will act as a deterrent for those willing to exploit the PRS.
It is currently difficult to comment on the likelihood of conviction under the new legislation, but it is perhaps fair to say that only the most extreme cases will attract the highest penalties.
Houses in multiple occupation (HMOs) have recently been highlighted as a type of property often embroiled in immigration disputes, with councils across the UK exposing illegal housing operations.
Often seen by landlords as an easy way to house and potentially exploit illegal migrants, HMOs form a part of the housing market that could be seriously affected by the revised penalties of the 2016 Act.
Proper precautions
Despite the severe-sounding penalties introduced by the new legislation, it is very simple for landlords to protect themselves. Carrying out the appropriate checks prior to agreeing a new tenancy is all that is required of landlords. Standard tenant documents which can be checked for evidence of the right to live in the UK include passports, national identity cards and residency permits. Copies must be taken and these should be kept by landlords for the duration of the tenancy and then for a year afterwards.
With many landlords using lettings agencies to manage their property portfolios, the lines of responsibility can become blurred. When delegating the sourcing and checking of tenants to lettings agents, landlords must ensure that a written agreement is drawn up between both parties. Having this documentation could prove essential in the event of illegal tenants being discovered in rented property.
Strong attention to detail when
agreeing tenancies should form the backbone of best practice for all private landlords, regardless of size of property portfolio or experience. Completing the necessary checks and paperwork may take a certain degree of time and organisation, but forms a fundamental level of personal protection.
While the financial cost of carrying out the checks is low, the financial cost of being caught out by the new legislation could be extremely high.
Generally, convictions resulting from the new legislation will stem from intelligence-driven investigations carried out by local authorities and local government. Evidence gathered from friends and neighbours will be key in exposing illegal tenancies and could lead to a national increase in property searches and residency permission checks.
Appropriate action
If a landlord suspects that their property is occupied by tenants without the correct documentation, the best course of action is always to contact the Home Office promptly and inform them of the situation. Upon notifying the Home Office, it is more likely that a landlord will be successful in their efforts to evict a tenant who does not have the right to reside in the UK.
In the event of a tenant eviction, landlords can often find themselves with “dead property” – that is, an empty house or flat. Unpaid rent and lost deposits are all possibilities in this scenario and could result in financial stress. In addition to completing the correct checks and ensuring tenants have the appropriate residency permissions before the tenancy begins, deposits should always be placed in the government-run Deposit Protection Scheme and thorough inventories should be carried out before a property is rented out.
Information is key
Many landlords will possibly be reading into the 2016 Act and worrying about the apparent severity of the new penalties. Luckily, there is plenty of advice available and associations such as the Citizens Advice Bureau, the National Landlords Association and the Residential Landlords Association from which to seek further information and support.
Above all, knowing who is renting your property and being sure that all tenants are compliant will help ensure that landlords do not get caught out by the new legislation.
Three points to keep landlords worry free
Although the Immigration Act 2016 addresses many areas of UK legislation, the section targeting the PRS can be condensed into three areas of key information and advice for landlords:
- The checks that landlords are required to undertake have stayed the same but the penalties for failing to do so have increased in scale dramatically.
- Having the right processes in place when renting properties is not only good practice for landlords, but is also necessary for compliance.
- If delegating checks to lettings agents or third parties, it is essential that a written agreement is in place to protect landlords in the event of any issues with illegal tenants.
Andrew Ford is a solicitor at law firm Shakespeare Martineau
