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Landlords - have your tenants got a right to rent?

From 1 February 2016, all private landlords in England will be prohibited from allowing an adult to occupy premises under a residential tenancy agreement if the adult is disqualified as a result of their immigration status. This includes private landlords subletting or taking in lodgers.

For properties in Birmingham, Walsall, Sandwell, Dudley and Wolverhampton these obligations were brought in for tenancies commencing on or after 1 December 2014. The initial pilot scheme will now be extended across the whole of England from 1 February 2016.

Who is permitted to rent?

A prospective tenant is disqualified from taking a residential tenancy agreement if they are not a "relevant national" or do not have a "right to rent".

A "relevant national" is a British citizen, a national of an EEA State other than the United Kingdom, or a national of Switzerland.

A person's "right to rent" is linked to their immigration status. This could be a permanent right to remain or a time-limited right to remain in the United Kingdom.

What do landlords need to do?

Before granting a tenancy to an adult, the landlord firstly has to ensure that the individual is not disqualified from taking a residential tenancy. The Home Office has issued guidance on how to make a Right to Rent check.

Landlords should note that:

  • An adult includes everyone over the age of 18;
  • It is immaterial whether or not they are named on the tenancy agreement. If they are going to be occupying the property, they need to have a "right to rent";
  • It does not matter whether the tenancy agreement is written, oral or implied.

What are the penalties for non-compliance?

If a landlord fails to carry out the necessary checks, they may be liable for a civil penalty of up to £3,000 in respect of each disqualified person allowed to occupy the property. Where a landlord uses the services of an agent to let or manage its property, the scheme allows landlords to agree with an agent in writing who is responsible for fulfilling the requirements of the right to rent checks. This means that agents may be liable for a penalty if the scheme is not complied with.  

How can landlords protect themselves?

If the landlord carries out the requisite checks, it will establish a statutory excuse against the penalty for letting to a tenant who has no right to rent. To benefit from this statutory excuse, a landlord would need to:

  • Conduct initial right to rent checks before authorising an adult to occupy rented accommodation;
  • Conduct follow-up checks at the appropriate date if initial checks indicate that an occupier has a time-limited right to rent, and;
  • Make a report to the Home Office if follow up checks indicate that an occupier no longer has the right to rent.

The majority of occupiers will be either British or EEA or Swiss nationals, or have an unlimited right to rent. Therefore, in most cases, a landlord will have to do no more than undertake an initial right to rent check to establish an excuse against a penalty.

Exemptions

Certain residential tenancy agreements are excluded from the scheme. These include: 

  • accommodation involving local authorities; 
  • social housing; 
  • care homes; 
  • hospitals and hospices and continuing healthcare provision; 
  • hotels and refuges; 
  • agreements to which the Mobile Home Act 1983 applies; 
  • student halls of residence and accommodation provided for students directly by a higher or further educational institution; 
  • tied accommodation provided by an employer to an employee; and 
  • long leases which grant a right of occupation for a term of seven years or more.

Furthermore, landlords do not have to check the right to rent of existing occupiers who moved in before 1 February 2016. Where the start of a tenancy pre-dates the scheme being introduced and it is renewed between the same parties and at the same property without a break, there is no requirement to conduct checks.

Immigration Bill 2015 and Housing Bill 2015 – further changes 

The Immigration Bill 2015 and Housing Bill 2015 which are currently going through Parliament will further develop this area. It is anticipated that harsher penalties will be introduced including a new criminal offence targeted at landlords and agents who repeatedly fail to conduct the right to rent checks as well as proposals to remove the protections from eviction from those who do not have a right to rent.

Practical considerations for Fixed Charge Receivers and mortgage lenders

The scheme makes no specific provision for circumstances where Fixed Charge Receivers (Receivers) or mortgage lenders (Lenders) are dealing with residential property.  

The scheme specifies who may be liable for a civil penalty in circumstances where a person with no right to rent is found to be in occupation. This is precisely the situation which Receivers and Lenders may find themselves in, where individuals are in occupation with no right to rent, prior to the Receiver’s or Lender’s involvement.  

In a change of landlord situation, the scheme provides that the original landlord who granted the tenancy agreement and who failed to comply with the legislation would be considered liable for a civil penalty. One would hope that a similar approach would be adopted for Receivers and Lenders who find themselves dealing with property where the original landlord has failed to comply with the right to rent provisions of the Immigration Act 2014.

Practical steps that Receivers and Lenders should take:

  • Obtain evidence from the outset of their dealings with the property to confirm how many adults are in occupation, their names and ages, regardless of whether they are named on a written tenancy agreement. 
  • Clarify if there was an agent acting when the tenancy was granted. Check the tenancy agreement for the agents' details.  
  • Make contact with the agent and obtain evidence that the right to rent checks were carried out at the start of the tenancy.
  • Consider how data will be retained in order to comply with data protection law.
  • Where Receivers are granting new tenancies, ensure that a statutory excuse is established. Retain adequate records, list all persons in occupation, not just those on the tenancies, make a record of children's ages and diarise for when they are over the age of 18 to carry out follow up checks.
  • Check original acceptable documents; refer to lists A and B of the code of practice to understand what forms of documents are acceptable. Once the original document has been checked, make a clear copy of each document in a format which cannot later be altered, and retain the copy securely for duration of tenancy and 12 months after tenancy ends, then securely dispose of it.
  • Where you are unable to clarify who is in occupation and how long they have been in occupation, take advice on appropriate action to recover possession of property. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

by Katie Evens

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