Buy to let landlords have had a lot of legislative changes to cope with in the past few years. From the rise in stamp duty for second properties to restrictions on what letting agents can charge for, landlords could be forgiven for thinking that the world was against them.
It’s still a highly profitable business, however, and one that can deliver great returns if you have a good business model and make the right choices.
One piece of law that can catch many landlords out, however, is the right to rent. This came into effect from February 2016 and is an important piece of legislation that carries significant penalties if you get on the wrong side of it.
What is Right to Rent?
If you are considering a potential tenant for your property, you have a legal duty to assess their right to rent in the UK. This forms part of the Immigration Act 2014 which was brought in to add more fairness to the immigration system. If you are not legally allowed in the UK then you do not have the right to rent a property.
Landlords are responsible for carrying out right to rent checks for each new tenant and failure to comply can end up costing as much as £3,000 in fines. The law applies to tenancies, sub-tenancies, leases of less than 7 years and subleases and licences.
What Are Your Obligations?
If you are a:
- Landlord privately letting out a property to tenants.
- Landlord or occupier who has a lodger living in your property.
- Tenant sub-letting part of your property.
- An estate or letting agent tasked in writing to provide letting services to a landlord.
You are responsible for carrying out right to rent checks. This means you need to find out who is staying at the property and have sight of documentation that someone has the right to rent in the UK. You need to make a copy of this documentation and keep it for your records. If you have a tenant who has a limited right to rent in the UK (for example, if they are here studying under a visa), then you need to note when this runs out.
Right to rent checks are relatively simple to undertake so there isn’t much excuse for not doing them. The type of documentation you should be looking for are: a British or EU passport or national identity card, a non-EU passport that gives the owner unlimited residency in the UK, a Home Office certificate or residence permit card or a certificate of naturalisation.
One issue that many landlords worry about is whether the documentation they have been given is real or not. Unfortunately, there is not much support here for landlords although there are some checking services online that might be useful. If your tenant is in the process of appealing, or their immigration application is still ongoing, you can check with the Landlord’s Checking Service via a government portal.
Penalties for Failing to Check a Tenant’s Right to Rent
If an illegal immigrant is found living at your property, whether they are on the lease or not, you will be liable to prosecution and a fine of up to £3,000. The amount will depend on a number of factors such as whether this is your first offence and whether you have a lodger on your property or it is privately rented accommodation.
The experts at Neil Smith Accountancy can help advise you if you’re considering renting out a property or if you already do; from landlord tax returns to compliance issues, get in touch to see what we can do for you.