Being a landlord can be a great way to either make a full-time living or supplement your income or pension. However, there are a few things that need careful consideration, such as the new obligation that all landlords face under section 22 of the Immigration Act 2014 that has been dubbed the ‘Right to Rent’.
The new ruling came into force at the start of last month, so any tenancies that have been granted on or after 1st February 2016 across England (Wales and Scotland are exempt) must comply with the new legislation. Failure to do so could result in an extremely hefty fine.
What is required of landlords?
Where many landlords may slip up is the fact that the checks do not only apply to prospective tenants but also to any other occupiers of the property that are over 18 years of age. This means that it is down to the landlord to obtain a full list of all occupiers whenever they are considering a new let, not simply the nominated tenants.
The scheme applies to all tenancies where the property being let will be the occupiers’ main or only residence, including the following:
- Resident landlord/lodger agreements.
Some tenancies will be exempt from the legislation, such as:
- Long leases.
- Holiday lets under 3 months.
- Tied accommodation.
- Mobile homes.
- Student accommodation.
Additionally, the majority of care homes, hospices and hospitals will also be excluded.
What are the Right to Rent categories?
You may have heard that the scheme is split into three categories that will determine whether or not someone has a right to rent in the UK. These are:
This covers two main groups, both of which – as the name suggests – have an unlimited right to rent property in the UK, namely:
- British citizens, those from the European Economic Area (EEA) or Swiss nationals.
- Those that have the right of abode in the United Kingdom, or any person that has been given indefinite leave to remain, or people who have no set time limit applied to their stay in the country.
Anyone who is not a British citizen, from the EEA, or a Swiss national will fall under the time-limited right category if:
- They have been allowed to enter the UK and remain for a specific period of time.
- They are entitled to enter or remain in the United Kingdom because of an enforceable right under the law laid down by the European Union or any provision made under section 2(2) of the European Communities Act 1972.
Allowing a tenancy to proceed in this instance will not incur a civil penalty. However, it is worth keeping in mind that you will be expected to carry out follow-up checks in the future to ensure that there has been no change in circumstances and to maintain compliance.
No right to rent
This is quite straightforward, as it applies to anyone who requires permission to be in the United Kingdom and does not have the right to rent in the country. If you do let to those that fall into this category, then it is highly likely that you will incur a civil penalty if they are using the property as their only or main home.
What do landlords need to do about Right to Rent?
Under the new scheme, all landlords must now carry out sufficient checks prior to any tenancy agreement being entered into. It is advisable to carry out checks on ALL prospective tenants, regardless of whether they are UK citizens and have an unlimited right to rent or not. This will help ensure that you do not encounter unlawful discrimination charges whilst conducting your checks.
The checks can be carried out at any time before the tenancy is granted for unlimited right to rent cases. For those that fall into the time-limited category, checks must be completed within a period of 28 days’ priory to the tenancy being entered into.
Avoiding liability for a civil penalty as a landlord
In order to avoid the cost and hassle of a civil penalty, landlords must establish what is termed a ‘statutory excuse’. To get your statutory excuse in place you need to carry out the following steps:
1. Conduct an initial check for right to rent prior to allowing any adult to rent your property.
2. Conduct follow-up checks if the initial checks show that the tenant only has a time-limited right to rent in the UK. These checks must be carried out at the appropriate time (see below).
3. Should your follow-up checks determine that your tenant no longer has a right to rent in the UK, you must inform the Home Office (see below) as soon as is ‘reasonably practicable’.
As the vast majority of prospective tenants will fall under the unlimited right to rent category, most landlords will not have to go any further than the initial checks to maintain their statutory excuse against incurring a civil penalty.
OK, got it. So, what exactly are the checks landlords need to carry out?
As we have discussed, in order to comply with the new legislation, landlords are now required to carry out an initial right to rent check on all prospective tenants. There are four stages to the process:
1. Identify all of the adults that will be occupying the property as their only or main home.
2. Obtain the original copies of one or more of the documents accepted under the new scheme for all those over 18 years of age who will be living in the property (see here for the full list).
3. Thoroughly check all of the documents provided whilst in the presence of the holder.
4. Make and retain copies of all documents, filing them with a record of the date upon which the checks were made.
Further to the initial checks above, if your tenant is in the time-limited right to rent category you will be expected to carry out follow up checks in order to maintain your time-limited statutory excuse against civil penalty. The length of this statutory excuse is either 12 months from the date of the tenancy beginning or up until the person’s right to remain in the UK expires (including the validity of their paperwork stating their right to be in the country; whichever is later).
All follow-up checks must be carried out within 28 days of the time-limited right to rent expiry date. Conducting a follow-up check requires you to ask your tenant to show you documentation that proves that they have a continued right to rent. Once this point is reached there are three things that may happen:
1. Your tenant produces sufficient documentation showing that they now have an unlimited right to rent in the United Kingdom. If this is the case, no further checks are needed for the duration of the tenancy.
2. Your tenant shows official paperwork stating that their time-limited right to rent has been extended or renewed. In this instance, follow-up checks will have to be carried out once more according to the guidance laid out above.
3. Your tenant fails to produce any paperwork stating that they still have a right to rent in the UK. If this is the case, it is your responsibility to file a report to the Home Office (see section below).
Filing a report with the Home Office
If it has come to your attention that your tenant no longer has the right to rent property in the UK, you have an obligation to report said tenant to the Home Office as soon as is reasonably practicable. Your report can be sent either via post or email and must contain the following details:
- The tenants full name.
- The address in which the tenant is staying.
- Your name and full address.
- If an agent is dealing with the property, their name and address must be provided.
- The date that the tenant first took up occupancy in the property.
- All copies that you made of the documentation inspected during the initial checks.
Please be aware that filing the report does not mean that you must begin the eviction process of your tenant.
So, there you have it, our guide to the new right to rent legislation that came into force on February 1st 2016. If you have any further questions or would like to discuss letting your property with Petty Son and Prestwich, please do not hesitate to get in touch with us on 020 8989 2091.
To stay up to date with everything we do, and see more guides like this one, come and like our Facebook page at – facebook.com/PettySonAndPrestwich