The government has significantly increased the fines issued to landlords or their agents for breaching the rules under the Right to Rent Scheme.  These higher penalties come into force on 22 January 2024 so where a landlord or their agent breaches the Scheme on or after 22 January 2024, the new penalties apply. 

The Code of Practice issued under Section 32 Immigration Act 2014 sets out what is required of landlords in order to comply with the Scheme.  We’ve attached a link here to the new code of practice, which is currently in draft form on the government website

This article provides a summary of the draft code which comes into force on 22 January 2024 and deals with the following.

• The requirements for landlords to ensure they do not let their property to those people with an unlawful immigration status (including the checks and methods for checking);

• The process for determining whether a landlord is liable to pay a fine where there has been a breach which includes establishing whether or not they have a statutory excuse;

• The process for determining the amount of the fine once it has been decided that the landlord is in breach and liable to pay said fine.

The code of practice is linked to the Immigration Act 2014 (“the Act”).  Under Section 22 of the Act, a landlord cannot let property in England, under a residential tenancy agreement, to an adult as their main home if that adult does not have lawful immigration status/does not have a right to be in the UK.  A landlord who is found to be letting their property to a “disqualified” person, will face a penalty if they are unable to prove they had a statutory excuse.

Landlord’s requirements

Before entering into a tenancy agreement, the landlord must ensure that the tenant has a right to rent in England by carrying out one of the following.

1. A manual right to rent check*;

2. A right to rent check using Identity Document Validation Technology (IDVT) via the services of an Identity Service Provider (IDSP);

3. Home Office online right to rent check.

*The manual checks involve the following.

• Obtaining original versions of at least one of the acceptable documents.  There is a list of acceptable documents provided in the Code of Practice (see here);  

• Check the documents in the presence of the holder;

• Make clear copies of the documents and retain them with a record of the date on which the check is made.

Establishing breach and statutory excuse where breach found

If it is discovered that a landlord is letting private residential premises to someone who is disqualified due to their immigration status, they may be served with a referral notice informing them that their case is being considered by officials at the Home Office to decide whether they are liable for a civil penalty.  The Home Office will also send the landlord an Information Request in order to allow the landlord an opportunity to provide further information and evidence in support of their case as well as assist the Home Office in its decision.

Determining liability

When dealing with a breach of the Right to Rent rules, the Home Office follows this framework in order to determine liability.

Stage 1

They need to establish if the landlord has a statutory excuse.  If the landlord has taken the following steps prior to entering into a tenancy agreement with the disqualified person then they will have a statutory excuse and not be liable to pay a civil penalty.

1. Carried out the right to rent checks using the acceptable documents set out in List A or List B of the Code of Practice;

2. Used the Home Office online checking service; and

3. Made any necessary reports

Stage 2

If the landlord did not carry out the above checks and, therefore, does not have a statutory excuse then they are liable to pay a penalty and the Home Office will issue them with a Civil Penalty Notice.  The amount of fine, however, is dependent on the type of breach.  If the landlord has not previously breached the rules under the Scheme then the amount payable is £5,000 per lodger or £10,000 per occupier.  If the landlord has been issued with a penalty notice in the last three years and used up all of their objection and appeal rights then they are liable to pay the repeat breach penalty which is £10,000 per lodger and £20,000 per occupier.

Stage 3

A landlord who is liable to pay a penalty may be entitled to a 30% reduction under the faster payment option (“FPO”).  This discount only applies to landlords who have not committed a breach previously and they are only entitled to the reduction if they pay the sum within 21 days of the Civil Penalty Notice issue date.  Those landlords who wish to pay by instalments are not entitled to this reduction.   

We set out the increases in the table below.  Where the landlord qualifies for the FPO, they will pay £3,500 reduced from £5,000 per lodger and £7,000 reduced from £10,000 per occupier.

Increases

We have set out below two tables showing the current fines and those which will take effect under the new Code of Practice on 22 January 2024.  You will see that the new amounts have increased significantly.

Fines where Landlord has NOT previously breached the Code of Practice

Fines where the Landlord HAS previously breached the Code of Practice

Conclusion

The above highlights the importance for both landlords and agents to ensure that they are complying with the Right to Rent Scheme and the Code of Practice in relation to the Right to Rent.   A breach of the rules could lead to a hefty fine if you have not carried out the relevant steps.

For more information, please feel free to contact a member of the team on 01435 897297 or info@kdllaw.com.

Disclaimer

This Legal Update describes the position in law as at the date of this article and care should be taken to note any subsequent amendments to the position as set out above.  The Legal Update is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of KDL Law or by KDL Law as a whole.

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