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Investment & New Homes
London Property Market 26 April 2016

What is Right to Rent 

Nicola Thivessen, Head of Compliance at Chestertons, answers some of the most common questions thrown up by the introduction of new rules requiring all landlords in England to check on the immigration status of all new tenants from the beginning of February this year – so-called 'Right to Rent' rules. According to the Residential Landlords Association, 72% of landlords surveyed recently were still unaware of the responsibilities the new rules place on them and the penalties they will incur if those responsibilities aren't met. More worryingly, 90% said that they have received no information on what procedures they now need to follow!

What is Right to Rent?

Part Three of the Immigration Act 2014 has introduced 'Right to Rent' checks for residential tenancies. Section 22 states that "a landlord should not authorise an adult to occupy a property as their only or main home under a residential tenancy agreement, unless the adult has a 'right to rent' in the UK. Therefore, the Immigration Act places a requirement on all landlords, or their agents, to check whether or not any prospective tenant, or occupier, has the right to rent in the UK before entering into a tenancy agreement.

Right to Rent checks came into effect in London for any tenancy starting on or after 1st February 2016. Furthermore, where the tenant's permission to stay in the UK is time limited, the landlord will need to conduct follow-up checks. If any person is found not to have the right to be in the UK the landlord must not allow the tenancy to commence. For re-checks, if a tenant's right to rent has expired, the landlord must make a report to the Home Office.

What does Right to Rent legislation mean for landlords and their agents?

Larger letting agents and landlords have been preparing for this for a while. It can be complex but provided you are diligent and keep clear records about when visas or passports expire, so you can go back and re-check at the appropriate time, it shouldn't add a huge burden to the process of securing a tenancy. If a landlord uses a letting agent, who agrees to carry out the checks on their behalf, then the letting agent is liable if the checks are not done, not the landlord. This offers some comfort and protectionand those landlords who haven't chosen to use a professional letting agent previously, maywell decide to do so now this new legislation is in effect.

And what if landlords don't use a professional letting agent?

Less experienced agents, online portals, DIY landlords who advertise through sites such as Gumtree and even existing tenants who sub-let via flat-share sites could face a problem. They are unlikely to have the expertise or resources to check documents, and may not be able to spot fraudulent documents when they see them. The Government has said it will excuse landlords or agents who are fooled by 'good forgeries', but this is rather a vague definition and with fines of up to £3,000 for those who get it wrong, that probably won't be much comfort!

Must all landlords and agents use a referencing company to verify documentation?

The Government has said it will not penalise those fooled by a 'good fake', but who adjudicates what this is? As well as carrying out a check of the original documentation, at Chestertons we use a specialist referencing firm to check the validity of our tenants' documentation. Many smaller agents and online portals – let alone DIY landlords and sub-letting tenants – may not have such protection in place.

Is there any way to sidestep this legislation? Sounds like a lot of extra red tape.

Some landlords may feel that the new legislation is a bureaucratic minefield, but they shouldn't be fooled into thinking they can play safe by only renting to British people. This is absolutely not the case and is tantamount to discrimination. Landlords or agents must carry out a right to rent check on every new tenant to ensure they are being fair and not inadvertently discriminating on grounds of nationality or race.

Might this policy deter people moving here from overseas?

Big business and corporate occupiers tend to back immigration policies that allow the 'brightest and best' into the UK – so if their employees find it needlessly expensive or bureaucratic to live and work in the UK, then potentially the extra red-tape could deter some firms from doing business here or encourage them to move operations to other countries. However, a good agent with a specialist corporate relocation service such as ours can manage any extra paperwork or referencing required and demand for homes to rent in London continues to be very strong.

Who is enforcing the policy?

As well as ensuring they are picking up on tenants whose visas have expired or who have entered the UK illegally, the Home Office will presumably also now have to gather evidence and prepare cases against landlords and agents who do not adequately check documentation. Unless the new rules are rigorously applied and enforced, then it could be all too easy for unscrupulous landlords or agents to flout the law and the whole system will be unworkable.

What are the penalties for not complying with the new rules?

Landlords who fail to adhere to these obligations can face fines of up to £3,000 per breach of the legislation. The Government is currently considering introducing tougher penalties for those who flout the rules, which could mean failure to comply is made a criminal offence punishable by a prison sentence.

How do I make sure I avoid a penalty?

In order to avoid a penalty for breach of the Immigration Act 2014, you must ensure you follow the below process:

  1. 1.Conduct an initial right to rent check on all occupants of the property, aged over 18, before granting a tenancy and keep a clear record of your check including photocopies of the relevant documentation.

  2. Conduct any follow up checks, for occupants who have a time limited visa and keep a clear record of your check

  3. Make a report to the Home Office if follow up checks indicate that the occupier no longer has the right to rent

Who should do the check, the landlord or the agent?

This will depend on the landlord's agreement with the agent. Under the terms of the legislation, the landlord is automatically responsible unless the agent agrees to accept responsibility. At Chestertons, we will automatically check the right to rent of all tenants prior to the start of the tenancy on behalf of our landlords. We will also carry out re-checks on behalf of any landlords who instruct us to manage the property. For our non-managed clients, they will be responsible for conducting their own re-checks during the tenancy.

If you are uncertain about any aspect of the laws surrounding letting a home in England and Wales, please contact Chestertons.