Residential tenancies – penalties for landlords and agents

The Government’s controversial ‘right to rent’ regime, which requires landlords to check tenants’ immigration status, has been controversial since its inception. The Joint Council for the Welfare of Immigrants (JCWI), supported by the Residential Landlords Association (RLA), has now been given permission to challenge the policy by way of judicial review.

‘Right to rent’ – the 2014 regime

The ‘right to rent’ regime was introduced by the Immigration Act 2014 as part of the Home Office’s now-infamous ‘hostile environment’ strategy. The aim was to prevent anyone who was in the UK unlawfully from having access to the private rented sector by requiring landlords to verify prospective tenants’ ‘right to rent’ in the UK.

Despite criticism from landlord, tenant and immigrant groups, the scheme was rolled out nationally from 1 February 2016. Landlords falling foul of the new regime faced civil penalties of up to £3,000.

The 2016 regime

In December 2016, various new offences for landlords came into force under the Immigration Act 2016. Sections 39 to 41 amended the 2014 Act, tightening the net to a degree which many found alarming.

The 2016 Act made it easier to evict tenants discovered to be in the UK unlawfully, with evictions now proceeding on the basis of a Home Office notice rather than a court order. At the same time, it introduced harsh new sanctions for landlords and agents who fail to comply with the Act’s requirements – they now face up to five years in prison and/or an unlimited fine for non-compliance, not to mention possible sanctions under the Proceeds of Crime Act 2002, in addition to the civil penalties already in place.

Landlords under residential tenancy agreements commit a criminal offence if they:

• know or have reasonable cause to believe that a tenant or occupant of their premises is an adult without immigration permission; or
• fail to take steps to terminate a tenancy agreement when they know or have reasonable cause to believe that the tenant or occupant’s leave to remain in the UK has expired.

Where an initial document check reveals that a tenant has a time-limited right to remain in the UK, landlords must conduct further checks when the right to remain expires. If the tenant has a permanent right to remain, follow-up checks are only required upon receipt of a notice from the Home Office stating that the tenant’s immigration status has changed.

If the landlord is a company and commits an offence with the ‘consent or connivance’ of an individual officer, both the company and the individual are liable.

In addition, agents are liable if they know that an offence is being committed but fail to notify the landlord (though it is open to landlords and agents to agree in advance which of them will be responsible for ensuring compliance with the regime).

It is certainly possible that liability under the new regime could be stumbled into inadvertently. ‘Landlord’ is defined broadly and includes individuals who may not appreciate that they are caught by the regime’s requirements – for example, tenants who sub-let, and home-owners with lodgers. The requirement to conduct follow-up checks upon the expiry of a time-limited right to remain is particularly hazardous, not least because it applies equally to landlords who purchase a property with occupational tenants in situ.

Legal challenge

18 months on, the impact of the policy is starting to become clear. The pressures on landlords are encouraging them to take the ‘safe’ option of renting only to those with British passports, forcing legal immigrants (and British citizens without passports) into the arms of rogue landlords. Research by the JCWI found that 42% of landlords were now less likely to rent to anyone without a UK passport, with the figure rising to 48% when they were explicitly asked to consider the criminal sanctions in place. What’s more, no evidence has yet been produced by the Government to suggest that the controversial scheme is having its desired effect as a tool for immigration compliance.

Supported by the RLA, JCWI has been granted permission to challenge the policy in the High Court; they are now crowdfunding for resources to proceed with the claim. For now, the regime remains uneasily in place.

The latest update on this matter is discussed in our Real Estate Blog.