UK: Higher Civil Penalties For Renting To Undocumented Tenants Revealed

In the continuation of the hostile environment, the Home Secretary announced that there would be a notable increase in the fines issued to those with the responsibility for checking that individuals have the right to rent in the UK. It is an announcement in line with the Government's obsession with demonstrating that they are taking steps to deter individuals from entering the UK where they do not have lawful immigration status.

The changes were announced on 07 August 2023 at the same time as the increase to fines for employers were announced. These changes have already been covered in our earlier post here. This post will look at what the law states in relation to right to rent checks, who is responsible for conducting checks, the impact of not undertaking the appropriate checks and any ability to challenge any resulting sanctions where applicable.

The Law on Right to Rent Checks

The Immigration Act 2014 ("the Act") introduced right to rent checks for those letting out properties to individuals in the private sector. Section 22 of the Act states that authorisation to "occupy premises under a residential tenancy agreement" must not be granted to an adult if they are "disqualified as a result of their immigration status". A residential tenancy agreement gives someone the right to occupy premises for residential use, provides for rent to be paid and is not an agreement that is excluded. Section 20 explains what authorising an individual to occupy a premises means:

"an agreement grants a right of occupation of premises for "residential use" if, under the agreement, one or more adults have the right to occupy the premises as their only or main residence (whether or not the premises may also be used for other purposes."

Right to Rent checks are therefore supposed to be conducted where the tenant is using the property as their "only or main residence". This blog post explains in more detail the factors that can highlight whether a property is an individual's only or main home.

The law on conducting right to rent checks has been effective from 01 February 2016 in all of England (right to rent checks do not apply to tenancies in Scotland, Wales and Northern Ireland), with the first phase having been initially launched in the West Midlands in 2014.

Who Needs to Conduct Right to Rent Checks

The Home Office has issued a guide to right to rent checks which is useful for understanding the requirements in relation to conducting such checks. The Guide explains that

"Responsibility under the Right to Rent Scheme lies with the landlord, that is the person who authorises the occupation of accommodation by the tenant under an agreement provided for the payment of rent."

The Code of Practice on right to rent: Civil penalty scheme for landlords and their agents explains that the following will be liable for conducting right to rent checks:

• Landlords (individuals and businesses) who let premises with a lease or tenancy agreement (as explained above – not an excluded agreement but an agreement which allows for premises to be occupied residentially as an individual's main or only home and for rent to be paid);
• Occupiers who sublet their accommodation (including those in social housing), who therefore become landlords for the purposes of the Scheme;
• Landlords or occupiers who take lodgers to share accommodation with a licence to occupy the property.

It is possible to transfer liability to a third party, for example, where one uses an agent's services to manage or let their property. In order for the liability to be successfully transferred (including liability for a penalty if there is a breach), it is important to ensure that there is a written agreement in place which clarifies that:

• The agent holds responsibility for conducting initial right to rent checks;
• Whether or not the agent will be liable for conducting any follow up checks for those who require these to be undertaken;
• The agent must carry out the checks within certain time frames (generally any time before the tenancy starts for those with an unlimited right to rent and no more than 28 days before the start of the agreement for those with time limited right to rent. More information as to applicable time limits can be found here).

The transfer of liability and who holds responsibility for a civil penalty can be complex depending on the interactions between the landlord and the agents, therefore it is always useful to get advice if one finds them in a situation where liability is being disputed.

Please note that right to rent checks do not need to be undertaken where tenants are living in the following types of accommodation:

• Social housing (apart from the exception where a tenant is subletting to another tenant);
• Care homes, hospices or hospitals;
• Hostels or refuges;
• Mobile homes;
• Student accommodation;
• Provided for by a local authority; or
  • by their employer as part of their job (tied accommodation);or
  • has a lease of 7 years or longer.

Who To Conduct Right to Rent Checks On

Right to rent checks should be conducted on any adult (those over the age of 18) who is going to be a tenant in the property. This applies whether or not a tenancy agreement exists, the individual is named on the tenancy agreement or the tenancy agreement is not in writing. It is illegal to discriminate and conduct checks only on individuals you believe or think are not British Citizens. Every adult who will be using the property as their main or only home should have a right to rent check conducted on them, whether or not they are a British Citizen.

What Are the Main Penalties for Renting Out to Those Without Lawful Immigration Status?

There are civil and criminal sanctions for those who rent to individuals without lawful immigration status. Those who rent premises to individuals who they know or have reasonable cause to believe do not have the right to rent commit a criminal offence. Doing so may result in the landlord or their agent facing an unlimited fine and in serious cases, up to five years imprisonment.

Where a landlord or their agent unknowingly lets premises to an individual who does not have the relevant right to rent, for example, by not complying with the Right to Rent Scheme (conducting the necessary checks), the landlord or their agent is likely to incur a civil penalty in the form of a fine. It is important to note that conducting right to rent checks as set out in the Code of Conduct and the Home Office Guide will result in the creation of a statutory excuse for the period that the right to rent check is valid (likely to be time limited for those who have a time limited right to be in the UK). This means that you are unlikely to be found liable for a penalty where you are found to have rented to a person who is not able to rent property due to their immigration status.

What Are the Current Fines for Renting Out to Those Without Lawful Immigration Status?

The current civil penalty for renting out to those without lawful immigration status are as follows (please note that the fees are for each lodger or occupier that is found to not have the right to rent):

What Are the Changes to the Fines for Renting to Those Without Lawful Immigration Status?

As can be seen there has been a significant and impeccably steep increase in the fines which landlords or their agents will have to pay where they are found to be renting property to individuals without the right to rent. It is therefore even more essential that landlords or their agents are conducting the appropriate right to rent checks. Our Right to Rent Check Guide for Landlord and Tenants provides detailed information as to the Right to Rent Scheme including how to conduct right to rent checks and the documents/services that can be utilised in order to do so effectively.

Is It Possible to Challenge the Issuing of a Civil Penalty?

You are able to object to a civil penalty notice where you are issued with one. Objections can occur if:

• You are not liable to pay the penalty;
• You conducted the correct right to rent check on a tenant;
• You made a report to the Home Office after a repeat check (where it showed that the tenant no longer had the right to rent); or
• The penalty was not calculated correctly.

You will need to object within 28 days of the date you were issued with the civil penalty notice. You will then be sent an objection outcome notice within 28 days, which will let you know whether your objection was successful or not. It is possible to appeal against an unsuccessful decision within 28 days of the objection outcome notice being issued to you. Appeals will be based on the same reasons that you made the objection for. It is important to note that if you are unsuccessful in your appeal, you might need to pay the Home Office's legal costs, therefore you should consider the merits of any appeal and seek legal advice accordingly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.