Increased Civil Penalties under the Right to Rent Scheme: Implications for Landlords

The Immigration Act 2014 governs the ‘Right to Rent’ across the private sector in England.  All landlords have a responsibility to verify the immigration status of prospective tenants.  Failure to comply with the Right to Rent regulations can result in severe civil penalties imposed on landlords who are found to have tenants residing in their properties without the legal right to rent.

 

Who can legally rent in the UK?

Prospective tenants fall into three broad immigration status categories:

1. Unlimited Right to Rent: This category encompasses British and Irish citizens, along with individuals holding indefinite leave to remain or settled status under the European Union Settlement Scheme (EUSS).

2. Time-Limited Right to Rent: Individuals with pre-settled status under the EUSS and others with lawful residence but time-constrained permissions, including those on family or skilled worker visas.

3. No Right to Rent: those without any immigration status, or who cannot prove their immigration status.

 

WHat is the right to rent scheme?

The legislation underpinning the Right to Rent Scheme is currently only in force in England and only applies to residential tenancy agreements first entered into:

• on or after 1 December 2014 in Birmingham, Wolverhampton, Dudley, Sandwell and Walsall

• on or after 1 February 2016 in the rest of England

This Code permits the Secretary of State to serve a notice on any landlord who lets a property to an individual without a right to rent, provided the tenancy is subject to the Scheme. Landlords have the option to appoint a letting agent to act on their behalf. Where an agent has accepted responsibility in writing to comply with the Scheme, the agent will be the liable party in place of the landlord.

As part of a wider crackdown on illegal immigration in the UK, the government is introducing a substantial increase in fines for landlords who fail to conduct proper right to rent checks on their tenants. This measure is introduced simultaneously with heightened penalties for employers who fail to perform right to work checks on their employees.

 

Increased civil penalties in the updated Home Office guidance

The Home Office revised its Right to Rent Scheme guidance on 8 February 2024 to reflect new penalties for landlords, which came into force on 14 February.

Previously, fines for non-compliant landlords stood at £80 per lodger and £1000 per occupier; however, they will now amount to £5000 per lodger and £10,000 per occupier for first time offences. For repeat offences, penalties will escalate to a maximum of £10,000 per lodger and £20,000 per occupier, a significant increase from the prior thresholds of £500 and £3000, respectively.

In light of these changes, this blog aims to provide an overview of the new guidance on the right to rent checks. Landlords who rent their property to individuals who either exceed their time-limited right to rent or have no right to rent at all may face civil penalties unless they can demonstrate a "statutory excuse." Essentially, if landlords or their agents have conducted the required right to rent checks correctly but still rented to someone without the right to rent, they will not incur penalties for that individual. Considering these penalties, if Landlords are unsure of their obligations, they should consider seeking legal advice.

 

What checks must be carried out? 

A right to rent check must be conducted on every individual aged 18 or older, irrespective of whether their name is listed on the tenancy agreement and regardless of whether the agreement is verbal or written.

The following checks must be carried out before a tenancy agreement is put in place:

1. Manual Right to Rent checks: this is applicable for all prospective tenants. There are three crucial steps:

a. Obtain original documents as listed in the Right to Rent guidance, including, but not limited to, a current valid passport, a birth certificate, a certificate of registration, or a travel document issued by the Home Office.

b. Check the documents are genuine and verify the individual’s identity;

c. Copy all documents examined and retain the copy for your records.

2. Digital Identity Document Validation Technology (IDVT) from an Identity Service Provider (IDSP): these checks are exclusively for British and Irish citizens. If the services of a certified IDSP are used for digital identity verification, holders of valid British or Irish passports (or Irish passport cards) can demonstrate their right to rent using this method.

3. Home Office Right to Rent check: Non-British or Irish citizens can be checked via an online share code generated by the tenant.

Physical visas, such as Biometric Residence Permits (BRPs) or Biometric Residence Cards (BRCs) can no longer serve as a document for the right to rent check. This is because these cards only provide evidence of immigration status at the time of printing and do not reflect any subsequent changes, such as revocation of immigration status.

If a share code cannot be generated due to the tenant's lack of documents or for any other reason, landlords have the option to request a Home Office right to rent check online. Typically, this process involves obtaining a Home Office reference number from the tenant.

 

how can landlords avoid discrimination in right to rent checks? 

Right-to-rent checks must adhere to equality laws, which are designed to prevent discrimination against certain groups. Landlords are obligated to ensure that no tenant is excluded or discouraged based on a protected characteristics.

Examples of potential discrimination include:

• Refusing to rent to tenants without British passports;

• Only conducting checks based on perceived nationality;

• Charging more rent, or increased fees, for non-British tenants to cover the cost of potential fines;

• Incorrectly claiming that tenants do not have a right to rent.

 

What if my current tenant has no right to rent?

A tenant must be provided with written notice of the landlord's intention to evict, and they must be given a minimum of 28 days to vacate the property. The eviction notice is deemed to have been received if it is delivered to the tenant or left at the property. Once the 28-day period has elapsed, the eviction notice becomes enforceable immediately, and the landlord is not obligated to obtain a court order for eviction.

 

WHo is liable for the penalties?

Under the Right to Rent Scheme, the responsibility lies with the landlord, defined as the person who authorises the occupation of accommodation by the tenant under an agreement providing for the payment of rent. Landlords may transfer their liability to a letting agent, but a written agreement must clearly state that the agent is accountable for conducting both initial and follow-up checks. An agent cannot further transfer this liability.

Tenants who sublet their property, meaning they rent out their room to another tenant, may also bear liability if they fail to conduct a right to rent check, unless they have a written agreement in place with their landlord.

Penalties are administered through Civil Penalty Notices issued by the Home Office. Recipients can object within 28 days, providing grounds and evidence to challenge the penalty.

FURTHER INFORMATION

For further information on the issues raised in this blog post, please contact a member of our Real Estate team or Immigration team.

 

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