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Right to rent

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This article follows on from our earlier update in January of this year on the ‘right to rent’ checks introduced by the Immigration Act 2014 (see here for a recap of these).

From 1 December 2016, a number of the provisions of the Immigration Act 2016 (the “2016 Act”) come into force.

Perhaps the most drastic change brought in by the 2016 Act is that, as well as the existing civil penalties, landlords or their agents may now find themselves the subject of criminal penalties for failures to comply with ‘right to rent’ obligations.

From 1 December 2016 landlords commit a criminal offence if the following two criteria are met. The first condition is that the landlord’s premises were occupied by an adult who is disqualified as a result of their immigration status and the second condition is that the landlord had reasonable cause to believe that the premises were occupied as such.

A person is ‘disqualified’ as a result of their immigration status if that person is not a relevant national (i.e. a British citizen, EEA or Swiss national) and does not have a ‘right to rent’ in relation to the premises. A person does not have a ‘right to rent’ if they require leave to enter or remain in the UK but do not have it or that person’s leave is subject to a condition preventing them from occupying the premises.

The 2016 Act gives landlords a defence against criminal liability where firstly the landlord has taken reasonable steps to terminate the illegal tenancy and secondly the landlord has taken these steps within a reasonable period beginning with the time when the landlord first knew or had reasonable cause to believe that the premises were occupied illegally. The Secretary of State is due to issue guidance on what constitutes ‘reasonable steps’. The current guidance is in draft form and is therefore subject to change. At the time of writing, the draft guidance notes that the landlord should seek mutual agreement with the disqualified tenant in the first instance and, if this is not possible, then follow the relevant eviction process. For example, service of a Section 21 Notice for an Assured Shorthold Tenancy.

Similarly, the 2016 Act introduces criminal liability for agents who knew or had reasonable cause to believe that the landlord would contravene the ‘right to rent’ provisions and had sufficient opportunity to notify the landlord of that fact but failed to do so.

The penalties introduced by the 2016 Act vary depending on the severity of the offence. For less severe breaches, punishment is by way of imprisonment for a term of up to 1 year and for the most severe offences, imprisonment of up to 5 years. In addition, an unlimited fine is possible either as an alternative to or in conjunction with imprisonment. Importantly, these penalties also apply to the officers of body corporates if that corporate committed the offence with the consent of an officer of the body (or a partner for partnerships).

As mentioned above, one of the ‘reasonable steps’ a landlord can take to terminate a tenancy is to follow the relevant eviction process. The 2016 Act introduces new powers for landlords in relation to this. Where all the occupiers of a premises under a residential tenancy agreement are disqualified and the Secretary of State serves a notice on a landlord:

  1. identifying all of the occupiers of the premises; and
  2. stating that they are all disqualified as a result of their immigration status

the landlord may terminate the tenancy by giving notice in the prescribed form, giving 28 days to end the tenancy. This notice is enforceable as if it were an order of the High Court.

Where only some, and not all, of the occupiers under a residential tenancy agreement are disqualified, the court may order that the disqualified occupiers’ interest under the tenancy be transferred to those persons under the tenancy who do have a right to rent.

Whist under the existing legislation, landlords are liable for a fine of up to £3,000 for contravening the right to rent provisions, the 2016 Act’s introduction of criminal liability for these failures gives the right to rent penalties real bite. As mentioned these changes are effective from 1 December 2016. For a refresher on how to comply, please see our article here. For more information on anything raised in this article or for further guidance on how to comply, please contact a member of our Real Estate Dispute Resolution team who would be more than happy to assist.

This article was written by Craig Walker, Partner, Real Estate Dispute Resolution, with assistance from Alasdair McKenzie, Trainee Solicitor.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.