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17 June 2015

Good Landlord Practice Series: 2

So now you have established that your property is fit for purpose, what are your obligations in respect of who you can/should be renting to?

In days of old, landlords were not really required to check or satisfy themselves with anything other than their tenant’s ability to pay.  It was very often a question of simple economics – if a landlord had a property and a willing tenant, then job done.

Recent years have, however, seen a tightening of the regulations governing the private sector and with it, an increase in the responsibilities of landlords and their agents.

The “Right to Rent” is something about which all private sector landlords need to be aware.  Since 1 December 2014, landlords and/or their agents within the private rented sector will be required to undertake right to rent checks against the following:

  • Tenants;
  • Lodgers;
  • Anyone to whom they sub-let a property under a residential occupation agreement.

It is important to note that this requirement is not retrospective and so will only apply to residential agreements made after 1st December 2014.  (See https://www.gov.uk/government/publications/right-to-rent-landlords-code-of-practice for further guidance.)

These new rules (currently in pilot phase in the West Midlands) originate from S22 Immigration Act 2014 and require that a landlord should not authorise an adult to occupy a property as their only or main home under a residential tenancy unless the adult is:

  • A British Citizen;
  • EEA or Swiss national; or
  • Has a right to rent in the United kingdom.

Having regard to the acute housing situation and the concern in the rise of so-called rogue landlords and the occupation of premises/properties by those with no legal right of abode within the UK, the onus is being placed upon landlords to make the appropriate enquiries and face appropriate penalties should they choose or fail to comply.

At the present time, a breach of the above regulations could result in a fine of up to £3,000 (per tenant if the breach related to a House in Multiple Occupation or HMO).

Arguably, a good number of landlords entrust their assets to an agent.  In this instance, the position is that the agent will be expected to carry out the relevant checks and if they breach the requirements, for the purposes of the act, it is the agent who will be liable.  It remains necessary, however, for a landlord to be aware that this is the case, in the event of any dispute.

Landlords should already have an established/proposed system in place in relation to checks on potential tenants.  The new regulations will, however, expand this responsibility to include the following:

  • Checking specific documents (from a defined Home Office list);
  • Retaining copies and records of the same (in compliance with data protection laws);
  • Making formal reports to the Home Office in certain circumstances.

Landlords and their agents will also have to be mindful that the checks will need to be undertaken in relation to all adult occupants of the property (including any children over the age of 18 and any other family members/adults who may be intending to reside in the property).

Unquestionably, regulation is here to stay and as a measure of just how much the landscape is changing within this sector, notwithstanding the list of requirements and considerations cited, at this point in the series, we are still technically at the pre-occupation stage and no tenant has yet stepped over the threshold!