Q&A: Right to rent liability

Leading immigration lawyer Mark Lilley-Tams, associate solicitor at Paragon Law, answers 12 important questions on liability under the Right to Rent scheme.

The forthcoming wider roll-out of the Right To Rent Scheme has attracted a lot of media attention over recent weeks and one aspect in particular, "liability", has generated a significant level of interest.

1. What does liability actually mean?

Liability is where you are legally responsible for something.

In the context of Right to Rent, a landlord or agent can be liable in two circumstances:

1. A) Pre-Grant Contravention: Where they enter into a residential tenancy agreement which grants a right to occupy the tenancy address to a person who is not permitted to rent the property due to their immigration status;

1. B) Post-Grant Contravention: Having entered into a residential tenancy agreement with a tenant who originally held a right to rent, the tenant loses the right to rent due to a change in their immigration status, and the landlord becomes aware of this or fails to carry out follow up checks in line with their obligations.

In both A) and B) the liability applies to allowing the following types of persons to occupy the premises:

1. i) Tenants named in the tenancy agreement

1. ii) Other persons named in the tenancy agreement; and

iii) Persons not named in the tenancy agreement, but who the landlord should have known were staying at the property had reasonable enquiries been made.

The provisions also make it clear that for the purpose of the right to rent scheme, tenants who ‘sub-let' or ‘sub-lease' a property, will be treated as landlords and will themselves become liable.

Although there is no need to notify the Home Office if pre-grant contravention checks identify that a person does not have a right to rent, in the case of a ‘post-grant contravention' the landlord also takes on responsibility for notifying the Home Office if they become aware that their tenant loses the right to rent due to their immigration status.

2. What are the consequences of becoming liable under the right to rent scheme

Under the provisions of the Immigration Act 2014, the person responsible for the checks will be liable to receive a civil penalty where they do not fulfil their obligations under the Immigration Act 2014. The Immigration Act 2014 confirms that the level of fines payable will be up to a maximum of £3,000 per tenant. Although this is a maximum, it is likely the level of fine would be lower for an initial breach of the Act and that the higher fines will be reserved for those who are ‘repeat' offenders.

The Immigration Bill 2015/16 contains proposals to broaden the liability that individuals face under the Right to Rent scheme. If this bill becomes law, as appears likely, then the persons with responsibility for carrying out the checks will become CRIMINALLY liable if the right to rent provisions are not followed. Such persons if convicted will face a custodial sentence of imprisonment for up to 5 YEARS and/or a fine.

3. When does this liability commence?

The right to rent provisions have applied in a pilot area which covers 5 areas within the West Midlands from the 1st December 2014. These areas are Birmingham, Walsall, Sandwell, Dudley and Wolverhampton.

It has now been confirmed that the right to rent scheme will be extended to the rest of England from the 1st February 2016.

The Home Office have confirmed that the scheme will also be extended to Scotland and Wales in the future, but the date for implementation of Right to Rent within Scotland and Wales has yet to be confirmed.

Liability only applies to NEW tenancy agreements entered into after the commencement dates (i.e. existing tenancy agreements will not be affected).

4. Is the government really going to be holding landlords liable for immigration checks?

Absolutely. Following a recent Freedom of Information Request, Right2Rent received confirmation that as of the 7th August 2015, 7 Civil Penalty Notices had been issued to landlords in the pilot areas. The penalties ranged from £80 to £2,000. A further 21 Civil Penalty Referral Notices were issued before the 7th August 2015, notifying landlords that they may be liable for a penalty.

Further, if the provisions contained within the Immigration Bill 2015 become law (as seems very likely) then landlords will also become criminally liable for checks unless they have passed on liability for the checks to someone else.

5. What does the law say I have to do to avoid liability?

In order to avoid liability, then landlords must carry out checks which ensure that they do not rent out premises to a person who is disqualified from renting due to their immigration status.

The government has published a code of practice which sets out the steps that a landlord must take in order to comply with their obligations under the right to rent scheme. The steps that must be followed, no more than 28 days before a tenancy is due to being, are:

1. A) Establish who will be living in the property as their MAIN home;

1. B) Obtain original versions of one or more acceptable documents for establishing a Right to Rent for EACH adult who will be living at the property;

1. C) Check the documents in the presence of the holder of the documents. The landlord must check that date of births and photographs are consistent with the occupier, that the documents establish that a tenant has a right to rent and the expiry dates have not passed and that the documents appear genuine; and

1. D) Make copies of the passport and other documents and retain them with a record of the date when the copies were made. These copies should be held for at least one year after the tenancy ends.

There will also be a need to carry out follow up checks in the future, depending on whether the initial checks establish only a ‘time-limited' right to rent or a ‘continuous' right to rent. If a ‘time-limited' right to rent is established, then a further check will be needed after the longest of the following:

1. a) one year, beginning with the date on which the checks were last made;

1. b) until the period of the person's leave to be in the UK expires; or,

1. c) until the expiry of the validity period of the document which evidences their right to be in the UK.

6. Can I avoid my obligations under Right to Rent by just renting to British Citizens?

It would be in breach of discrimination laws to discriminate on grounds of nationality by only renting to British citizens. A landlord adopting this approach could face a discrimination suit which would have uncapped damages.

In order to comply with the Right to Rent scheme, landlords should carry out checks on ALL prospective tenants, regardless of appearance, to ensure that they are complying with the new scheme.

The government have published a code of practice on discrimination for landlords in respect of the new right to rent scheme, in order to give guidance to landlords on avoiding discriminatory practices.

7. Can letting agents be liable?

Letting Agents are only liable under the Immigration Act 2014 (and under the proposals within the Immigration Bill 2015) where they have a written formal agreement with a landlord to take on legal responsibility for the checks. Where no such written agreement exists, then the liability for the right to rent checks will remain with landlords.

8. Are tenants also liable?

Tenants are not liable under the Right to Rent scheme. Whilst tenants who do not have a right to rent may be subject to enforcement action by the Immigration Authorities in connection with their Immigration Status, they will not be liable for any civil or criminal penalties under the Right to Rent Scheme.

9. Can I pass on my liability to someone else?

Yes – it is possible to pass on liability for carrying out the checks to a third party. The Immigration Act 2014 describes the third party as an agent but they do not need to be a letting agent. If a formal written agreement is entered into with an agent to carry out the checks, this provides a statutory excuse to a landlord who would otherwise have been liable under the scheme. If liability has been passed on to an agent, then it will be the agent who is liable to pay fines (and in the future will face criminal sanctions) if the checks have not been properly conducted in line with the written agreement.

Right2Rent provide a service in which they can act as an agent and take on liability for carrying out the checks. A written formal agreement is provided to the landlord confirming that liability has been taken on for the checks that have been carried out.

10. If someone else is liable does that mean I can take in any tenants without any personal responsibility?

No – a landlord remains liable if they become aware that a tenant who is disqualified from renting due to their immigration status, is being rented to and they will not be able to rely upon the defence of having passed on responsibility for the checks to an agent. Also, if the agent tells the landlord that the tenants have not established a right to rent, they will not be able to pass on responsibility under the scheme.

11. If someone else takes on my liability does that mean they will pay my fine or go to prison on my behalf?

Essentially yes – as long as the landlord complies with their obligations under the written formal agreement and they are not aware that their tenant does not have the correct status, then the responsibility for carrying out the checks are passed on to an agent, and it is the agent that will have to pay a fine or face criminal sanctions if they have not properly carried out checks.

12. What if I make a mistake or misinterpret documents? Do I remain liable?

There is no excuse under the statute if the landlord makes a mistake in interpreting documentation or commits an innocent error. In these circumstances, unless landlords have passed on liability to an agent, they will remain liable for breaching the requirements of the Right to Rent scheme.