Fines for landlords: essential tips and guidance to avoid costly penalties

Today, being a landlord or a managing agent is expected to be a highly professional and conscientious business, with severe consequences for ignoring the rules.

Fines for landlords can run into tens of thousands of pounds, but fortunately, with the right preparation and knowledge, they’re easier to avoid than a parking ticket.

Nonetheless, even the most well-meaning landlords can pick up fines because they miss a deadline or forget about something altogether, so in this week’s blog, we’re distilling the details around:

1. Required certificates.
2. Property licenses.
3. Identity checks.
4. Late compliance versus non-compliance.
5. The cost of fines.

Whether you have a brilliant managing agent to share the liability, or you’re managing everything yourself, our handy guide to landlord fines is here to help you stay penalty-free.

REQUIRED CERTIFICATES

All rental homes need to have several certificates in place at the start of a tenancy that need to be renewed at various intervals.

So it’s a sensible step to make a checklist of all the certificates you need and then schedule their renewal inspections in a calendar for a couple of weeks before the expiry dates so you never forget.

• You must have a valid Energy Performance Certificate (EPC) when you put your property on the market, and it must be renewed every ten years.
• Every property must have a valid gas safety certificate before a new tenant moves in, and then an annual inspection after that, with copies supplied to the tenants.
• An electrical safety certificate must be given to new tenants within 14 days of them moving in and renewed every five years.
• Smoke alarms and carbon monoxide detectors must be tested on the day a new tenancy starts, and at least annually after that, with confirmation provided to the tenant.

Finally, if a tenant refuses access for a safety check and the certificate lapses, you must be able to show regular attempts at renewals if you want to either avoid a fine or serve notice successfully.

PROPERTY LICENSES

While property licenses are primarily associated with Houses in Multiple Occupation (HMOs), they also apply to single dwellings in some areas, depending on the local authority.

Councils can restrict the number wherever they see fit, and there are three types of licence.

• Mandatory licensing applies to all HMOs across the UK with five or more people living there who form two or more households.
• Additional licensing is discretionary to individual local authorities and applies to HMOs with three or four people forming two or more households.
• Selective licensing affects every rental home, whether a single dwelling or an HMO, that falls inside a particular local authority’s selective licensing zone.

A good letting agent will know the current licensing zones in their area, along with any upcoming changes that may affect your plans to alter a property you already own, or to buy a new one.

IDENTITY CHECKS

Although it's good practice to check every tenant’s identity, you’re also legally required to confirm a tenant’s right to rent for any rental property you own in England (but not in Scotland or Wales).

This detailed series of checks is to prove that everyone over 18 who will be living in your property has a legal right to do so, and for how long. The procedure includes:

• Asking each tenant to supply the originals of documents in person that prove they can live in the UK (holders of UK passports automatically qualify).
• Checking that passports and visas are genuine, that the photos are of the tenant, and that the dates of birth are the same on all documents (and believable).
• Confirming that documents don’t look like they’ve been altered, aren’t too damaged, and have supporting paperwork in the event of name changes from marriage or divorce.
• Keeping copies of all documents and scheduling further checks for tenants with a time-limited right to rent (or if any of their children will turn 18 during the tenancy.

The English government takes this very seriously, with fines up to £20,000 for not carrying out Right to Rent checks, and up to five years in prison for renting to someone with no right to live in the UK.

LATE COMPLIANCE VS NON COMPLIANCE

Sometimes, the first contact we have with a new landlord is when they discover they’re in breach of the law and aren’t sure what to do next.

They’re often too frightened of the consequences to start putting things right, but the problem won’t go away by itself, and there are some benefits to facing things head-on, including:

• Deposit protection failures risk a fine of up to 3 month’s rent, but you stand a better chance of getting a lower penalty if you protect the deposit late rather than never.
• Given that tenants can claim back up to a year’s rent for an unlicensed HMO, the sooner you secure a licence after they move in, the lower the potential penalty.
• If you ever want to serve notice on your tenants without it being automatically invalidated, you can remove that potential trigger by renewing any lapsed safety certificates first.

So, while late compliance may not keep you entirely penalty-free, it certainly beats doing nothing. And beyond the potential to lessen the consequences, it removes a nagging future worry.

THE COST OF FINES

Poorly managed and non-compliant rental homes are no longer just a headache for tenants - they carry severe financial, criminal and custodial penalties for landlords, including:

• Not having a valid Gas Safety Certificate carries a fine of up to £6,000 or six months in prison, and right through to manslaughter charges in the event of a death.
• Breaching the Tenant Fees Act or failing to have a valid Energy Performance Certificate both attract fines of up to £5,000.
• Without a valid electrical certificate, you risk a fine of up to £30,000 per offence, although your tenant doesn't have an automatic right to claim unless someone has been harmed.
• Inadequate provision of smoke alarms, carbon monoxide detectors and fire extinguishers carries potentially unlimited fines and even a prison sentence in the most severe cases.
• Non-compliant HMOs (from licensing to health & safety) carry unlimited fines, often tens of thousands of pounds, and a possible Rent Repayment Order order of up to a year’s rent.

And if all that wasn’t enough, health & safety failings can lead to personal liability claims from tenants, so the potential repercussions really do make it worth getting your house in order.