How will the new Right to Rent checks affect landlords
From October 1st in England, new rules meant landlords needed to have fitted and tested smoke alarms on every storey of a let property. This change had such an impact on the market that it was rumoured the country was running out of stock of alarms.
In addition, for rooms heated by solid fuel, carbon monoxide alarms were required, and if taking on a new tenant, a whole host of ‘prescribed information’ including the government’s ‘How to Rent’ guide needed to be issued to new tenants by the landlord; failure to do so meant difficulties in evicting a tenant under Section 21 in the future.
With little time for landlords and letting agents to absorb these new rules and the costs associated with them, yet another burden on landlords has been announced. Again, in England only, from the 1st February 2016, landlords will be responsible for making checks on tenants prior and during their let to make sure that they are in the country legally.
Failure to make these checks can result in anything up to a £3,000 fine.
The legislation isn’t new as it has been piloted in the West Midlands throughout 2015 in Walsall, Sandwell, Dudley and Wolverhampton, but from February 2016 all tenants looking to rent in England will need be thoroughly checked, and as a landlord you will have to retain evidence that these checks have been made.
The good news is, for landlords who use a letting agent to manage their let(s), the responsibility for ‘right to rent’ checks can be abdicated to a letting agent. However, not all letting agents keep up with legal changes and as it is ultimately you, the landlord, that will be responsible to prove checks were made, make sure you have it in writing from the letting agent, or in the terms and conditions you sign, that they will make the checks for you and take responsibility for any failings and fines.
However, if you let or manage yourself, bear in mind that the rules don’t just abide to landlords letting out whole properties, but lodgers and sub-tenants too. In addition, these checks need to be made on existing tenants if their tenancy started on or after 1st December 2014.
If you need to know more about the checks you need to make, such as identity checks and making sure any visas are valid both now and during the tenancy, read the information on the government website here. If you are self-managing, make sure you keep a record and copies of all the checks you or your agent make and the date(s) you or they made them.
Are these checks going to be too onerous for landlords? Research from the government, both quantitative and qualitative, has been carried out on landlords, letting agents and tenants during the West Midlands pilot. These conclude that, in the main, they aren’t too bad, perhaps taking up to 20 minutes, or no longer than an hour than before.
What is difficult, however, is making sure the documentation given to you by the tenant is genuine, especially when it may well involve passports and visas from countries where spotting fakes versus original documents isn’t so easy.
There is some support from the Home Office which is free for you or agents to access and this comes in the form of a telephone helpline and online checking system, so you don’t have to work completely in the dark.
If you do find a tenant who has an immigration application which is still being processed, they will let you know (in theory) within two working days whether you can let to the tenant or not. Although this service was successful during the pilot, there are worries whether it will cope when rolled out across England, so it would be wise to try to avoid securing new tenants around February and March 2016 if you can, just in case there is a backlog.
For those of you that run your own business, these checks should be familiar. As business owners, you will already have to make them on potential employees and this system has been working successfully for some time, it’s just that now the government is trying to secure legal recourse against rogue landlords and letting agents who exploit illegal immigrants. So, in theory, making these checks is in everyone’s ultimate interest.
It remains to be seen how successfully it can be implemented on a national basis and as neither agents nor landlords need to report immigrants who are here illegally, just not rent to them, this could just end up driving them to the very rogues they want to expose, while imposing a cost on the ‘good guys’ who abide by the law.
The article is written by Kate Faulkner, one of the UK’s leading property experts. Mortgage Advice Bureau have relied on the expertise of the author for the content of this article.