In our latest web session, David Smith, Property Solicitor and Mediator at Anthony Gold Solicitors and Policy Director of the Residential Landlords Association explained how landlords must fulfill their right to rent obligations.
‘Right to rent’ is a hotly debated topic, but isn’t always straightforward. It was first introduced in the immigration act 2014 and, since then, the government is not just rolling it out further, but seems determined to add increasingly stringent penalties. Fall foul of this and you could potentially find yourself in prison, which is why this is one piece of legislation landlords need to get their head around.
What is the ‘right to rent’?
The right to rent is an entirely new species of legislation which grew out of the Immigration Act in 2014. It’s similar to the right to reside or the right to work, but is not the same. For example, it is possible to have the right to rent without the right to reside or to work.
It comes in two forms:
- Permanent right to rent: As the name implies, this is a permanent right. Once you have it, you’ve got it forever. It applies to UK nationals and people from the European Economic Area (EEA) plus Switzerland. So, that’s anyone from the EU plus Norway, Iceland and Liechtenstein. Of course, that will soon not include the UK, but the legislation itself should not change. The Government may decide to revoke the right to rent from EU nationals, depending on how the negotiations go, but that’s a story for another day.
- Time-limited: This is a little more complicated. It applies to someone who has permission to stay for a limited time only – such as someone on a VISA from the USA or people who are here on asylum.
There is a third option called permission to rent. This applies to people who have been given special consideration by the Home Secretary. Most of the time, this will be someone who is awaiting deportation, but has enough money to sort out their own accommodation in the meantime.
This is important because you cannot rent a property to someone who does not have the right to rent. If you do you will be penalised. Previously that would have involved a non-criminal penalty such as a fine, but after 2016 they’ve really tightened it up. In theory you could go to prison for up to five years with an unlimited fine. That hasn’t happened to anyone yet, but there’s every chance it will one day.
While it is in your best interests to run a check, you are not obliged to do so. However, if you don’t you’re running a big risk; if your tenant doesn’t have the right to rent after all, you could be in big trouble. Running a check falls into the category of having a statutory excuse. So, if you run a check, but the tenant turns out to have forged the documents, you will be covered.
This rule doesn’t cover everyone. It excludes:
- Anyone under the age of 18
- Properties which are used as a second home or holiday home
- Long leases over seven years
- Mobile homes
- Students who have been nominated by an educational establishment as it is their duty to run the checks.
When to run a check
The check must be done before you rent the property. If you establish permanent right you don’t have to do it again. If you only establish a time-limited right you’ll have to do a check before the time runs out. A time-limited right lasts for either 12 months or the time specified on the document, whichever is the longer. So, if I show a passport with a two-year visa you don’t need to check me for another two years. If it’s for three months you can wait 12 months.
There are some instances in which you can pass the obligation on. For example, you can have your agent take the check, but you’ll have to get this agreement in writing and they will probably charge a fee. If you’re a tenant with a sub-tenant you can pass the obligation up to your landlord, although this might not be something you’d want to do as a landlord.
If you’re taking over a property which has existing tenants you can take any checks done by the previous landlord at face value. You don’t need to check if they were done properly but you will be responsible for doing the recheck for a time limited one.
You should start a check within the 28-day period before the tenancy agreement. It can be very complicated, but it doesn’t matter too much. The home office won’t worry as long as the checks are done. What you can’t do is run the checks three months before they move in. They must be done within that 28 day window.
You can delay a check until after a tenancy has commenced under certain circumstances. So, if you’ve signed an agreement with someone from out of the country you can delay until they enter the country, but must do it before they take up the property. For example, they would arrive at the airport, go to meet you where you’d run the check before handing over the keys.
How to check the documents
Checking right to rent is all about the documents and these must be checked face to face or by a video link. You must be able to see the person’s face with the original documents in their hands. Each and every qualifying person needs to be checked – not just the main person on the rental agreement. So, if you have a family with children over the age of 18 you will have to check their documents with them in the room.
So, which documents do you needs? For permanent right to rent there is one single list and this is mainly about passwords – documents which prove their identity, their nationality and their right to rent. If they’re UK nationals, or from the EEA all they need is a passport which proves their nationality. It doesn’t even have to be up to date.
List two is for anyone who can’t show you their identity or has to prove their right to a time-limited right to rent. This includes benefits paperwork, a driving license, a letter from their employer which sets out their right to rent. It might even work if you have a letter of discharge from a prison – although if this is the case you might want to avoid them for other reasons.
When you’ve got the documents you’ll need to copy them, including any sides which have a biometric chip on them and run some checks for forgeries. Don’t worry, nobody’s expecting you to be an expert, but they do want you to have a look for tell-tale signs such as the texture of the paper, misspellings and details which don’t make sense. For example, for some reason many fraudsters can’t resist knocking 20 years off their age – especially men – and it’s surprising how many people have been caught because their ages didn’t make sense.
If you tenant is here on a time-limited right to rent, you’ll need to do rechecks. This has to happen within the time limit, but there’s nothing to stop you doing this sooner – indeed many people run these checks all over again when the time comes to renew the lease.
It’s a laborious process and involves going through the original documents all over again – even if they are the same ones. The big difference here is that if your tenant fails the check you must alert the Home Office. You can do so via this link. With the initial check there is no obligation to alert the Home Office – you just don’t rent to them.
Paying the penalty
Finally, let’s look at the penalties because these can be pretty steep. For the most part they are financial. A first offence will cost you £1,000 for every person who does not have a right to rent. A second offence will see the fine rise to £3,000 although it’s much less for a lodger.
If you are penalised, the Home Office serves you with a notice of intention to fine you and you’ll have to respond within 28 days. You can pay by instalments, but if you pay within 21 days you’ll get a 30% discount, but this means you can’t contest it.
Now, though, since 2016, the stakes have got a little higher. If the Government finds that you knew – or should have known – that your tenants were there illegally, they can take you to court and you could end up with a maximum sentence of five years. They will also give you an unlimited fine and chase you for all the rent you shouldn’t have earned.
It’s pretty serious stuff and is well worth getting on top of. One thing the arrival of Right to Rent has shown is that there are more people with fraudulent papers than we believed, so it’s a very real problem. Nobody is expecting you to spot all fraudulent documents, but they are expecting you to check. As long as you do this you’ll be covered in case you tenant is dodging the law. We haven’t yet seen any landlords sent to prison, but the government is very serious about this so it really is a matter of time.